Euroland Municipal Bonds: New city states
If only all metropolitan areas were as comfortable with capital markets as the Région d'Ile de France, investment bankers' hopes of a lively, US-style municipal bond sector might come true. Since its debut in 1992, it has raised €1,275 million ($1.43 billion) through 12 bonds in seven currencies.
Uniquely in Latin Europe, Ile de France, which has Paris at its centre, has a triple-A rating from both Standard & Poor's and Moody's. S&P affirmed its approval in mid-January this year, despite the region's political problems. President Jean-Paul Huchon governs without a majority in the regional council, and opponents had convinced a tribunal to annul the 1998 budget. But since Huchon's administration had already spent the budget, S&P reasonably figured their legal defeat didn't make any difference.
Director of financial affairs André Autrand explains Ile de France's liking for bond markets: "We have a regular investment policy. So we have a regular need for resources. This fits the markets: they want regularity." Also, "the cost is far more interesting than that of banks' services".