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Friday, April 01, 2011

A Little More On Illinois Vs. Portugal

Bloomberg is reporting that Portugal had to pay 5.793% on average in their latest round of bond sales. Illinois bonds look to be yielding around 5.5%. To give a frame of reference, Portugese bonds are typically compared to 1-year German bonds which are now yielding 1.5%. Illinois bonds might be compared to US Treasury bonds which are yielding 0.3% for 1-year bonds. That means Portugal is paying a 4.3% premium over Germany and Illinois is paying a 5.2% premium over the Federal government.

Next time you want to sneer at the Euros and their ridiculous, bankrupt nanny states, consider our friends in the Land of Lincoln.

Update: A commenter pointed out that those were longer maturity Illinois bonds, so the comparison isn't quite fair.

2 comments:

  1. Anonymous8:18 AM

    Well, in the article they are comparing one year Portugal bonds to one year German bonds which is appropriate. But you are taking 20-30 year Illinois bonds and comparing them to one year US Treasuries, a huge mismatch. So, for instance on the final page of the prices for Illinois bonds which you link to you will see an Illinois bond that expires in 11/12 that yields around 1.5%.

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  2. Thanks! Update posted.

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