Gary Gildersleeve Quoted by
BusinessWeek on Utility Bonds

May 20, 2010

Debt supported by utility bonds is attractive now relative to general obligation bonds, said Gary Gildersleeve, a partner at Evercore Wealth Management in New York, in an interview with BusinessWeek ahead of $667.9 million debt issue by the Los Angeles Department of Water & Power, the largest municipal utility in the United States.

"I don't think they are too expensive right now," said Gildersleeve. "The psychology from a few years ago was ingrained that GOs were always better because they could tax. It's now revenue bonds -- if you can find issues that have a dependable revenue stream then why take on the headline risk?"

Ten-year debt supported by utility payments reached 3.33 percent yesterday, the lowest since March 29, according to Bloomberg Fair Market Value data. The premium over general obligations for 10-year municipal revenue bonds, backed by utilities has fallen 78 basis points in the past 11 months as states and municipalities work to close budget deficits.