State And Local Governments In The Financial Markets参考.ppt

State And Local GovernmentsIn The Financial Markets ? Learning Objectives ? To understand why state and local government borrowing has grown so rapidly in recent years. To explore the various ways in which state and local governments raise the funds they need. To examine the marketing process through which state and local government bonds and notes reach investors, and to learn why these instruments are attractive to investors. Introduction The borrowing and spending activities of state and local governments have been one of the most rapidly growing segments of the financial system in recent years. State and local governments are pressured by rising populations and inflated costs, while many investors are attracted by the high quality, ready marketability, active secondary market, and tax exemption feature of state and local debt obligations. Growth of State and Local Government Borrowing Growth of State and Local Government Borrowing What factors account for the strong growth in municipal borrowing? Rapid population growth Uneven distribution of population growth across the U.S. – smaller outlying communities were transformed into cities Upgrading of citizens’ expectations concerning the quality of government services Rising construction and labor costs Sources of Revenue and ExpendituresFor U.S. State and Local Governments Sources of Revenue and ExpendituresFor State and Local Governments Motivations forState and Local Government Borrowing State and local governments borrow money to satisfy short-term cash needs and maintain adequate levels of working capital, to finance long-term capital investment like building schools and highways, and for advance refunding of higher cost securities. Types of Securities Issued byState and Local Governments Short-term securities are generally issued to provide working capital. Tax-anticipation notes (TANs) Revenue-anticipation notes (RANs) Bond-anticipation notes (BANs) – for temporary financing of long-term projects until