Expensive muni-bond market causes headaches for WTC development

Larry Silverstein and the World Trade Center site

In order to continue construction on the new World Trade Center, Larry Silverstein and the Port Authority will be forced to dip into the pricey municipal bond market, the Wall Street Journal reported. Silverstein’s company, Silverstein Properties, and the Port Authority intended to sell $1.37 billion of tax-exempt bonds in December to raise construction funds, but hesitated due to the high interest rates the municipal market commanded. Silverstein has used shrinking insurance funds to pay for construction, which at the moment has contributed 19 stories and is on pace for completion at 2013. In December, triple-A rated bonds were yielding 4.61 percent. Yesterday, they yielded 4.73 percent. Silverstein and the Port Authority plan to sell Liberty Bonds, government approved, tax-exempt bonds created after Sept. 11, but the Journal quotes sources who believe investors would demand an interest rate of 6 percent — much more than the developers had planned for last year. [WSJ]