Auction-Rate Headaches; Issuers Search for Ways Around Soaring Costs; Prior Trouble in Market
Hospitals, schools, public utilities and other institutions that have issued auction-rate securities to raise cash are scrambling to get out of this troubled corner of the credit market.</br></br>Valley Medical Center, in Renton, Wash., moved to retire $170 million in auction-rate securities by issuing tax-exempt, 30-year bonds that will price today.</br></br>The Long Island Power Authority, or LIPA, is looking to get out of all of its $993 million in auction-rate debt during the next several months, possibly replacing at least some of it with long-term, fixed- rate bonds. The University of Pittsburgh Medical Center also stepped up efforts to exit the market with the help of funding from local banks.</br></br>Other issuers, including the Port Authority of New York & New Jersey, New York's Battery Park City Authority and Brazos Higher Education Corp., said they were evaluating their options.</br></br>"We're looking to address this as quickly as we can," LIPA Chief Financial Officer Elizabeth McCarthy said in an interview. "You've got to deal with the fact that the market seems to be pretty much going away."