Florida Schools, California Convert Auction-Rate Debt (Bloomberg.com)

[A HERETIC I AM]

Feb. 22 (Bloomberg) -- California, Florida schools and the owner of John F. Kennedy International Airport joined a growing list of municipal borrowers exiting the U.S. auction-rate bond market as record failures push taxpayer costs higher.

Thousands of auctions run by banks to set rates on the debt failed this month as investors shunned the securities and bankers refused to submit bids, sending interest costs to 10 percent or higher on some bonds. Auctions covering as much as $26 billion of bonds a day failed to attract enough buyers since Feb. 13, according to Bank of America Corp.

Florida's Palm Beach County Schools converted $116 million of the securities into fixed-rate debt this week, while the Seattle area's Valley Medical Center refinanced $170 million. The Port Authority of New York and New Jersey, which runs JFK and other airports, bridges, tunnels and sea terminals around New York City, said it would redeem $200 million next month after its weekly interest rates rose as high as 20 percent.

``We expect to be out of the auction-rate market business in six to eight weeks,'' said Steve Coleman, a Port Authority spokesman.

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