Why is a bankrupt MTA still issuing bonds?

Why is a bankrupt MTA still issuing bonds?

According to Wednesday's New York Times, the MTA is advertising directly to the public to sell its tax-exempt bonds. Ed Koch is helping with the radio ads. The money is needed to "buy new equipment and maintain the network, which will improve reliability, safety and customer service," says Koch.

Actually, the money will be used to pay off existing bondholders! Why would anyone want to invest before Richard Ravitch files his report in a month or two about the MTA's finances? Two people wrote this story and there's not one mention about the credit rating of the bonds?

In my opinion, the MTA is sure to default on these bonds. Hasn't the MTA fleeced New Yorkers enough?

Hey, Michael Bloomberg, maybe you wanna invest in this crap?

LINK:

http://www.nytimes.com/2008/10/15/nyregion/15mta.html?ref=nyregion

To Stimulate Bond Sales, the M.T.A. Tries a Radio Pitch by Koch

Published: October 14, 2008

With the credit markets suffering as a result of the global financial crisis, the Metropolitan Transportation Authority has taken the unusual step of appealing directly to its riders for help in raising cash — but not, in this case, with a fare increase. The authority began running radio ads over the weekend, with former Mayor Edward I. Koch promoting the sale of tax-exempt bonds that it uses to finance its large-scale projects.

“These bonds help buy new equipment and maintain the network, which will improve reliability, safety and customer service,” Mr. Koch says in the ads.

The authority typically sells its bonds to large institutional investors; the appeal to the general public is unusual and intended to generate greater demand for its bonds at a time when the credit markets have been badly shaken. The ads tell interested buyers to contact their broker or financial adviser or to go to the authority’s Web site, www.mta.nyc.ny.us, where a prominent link will take them to the bond sale prospectus.



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