abstract:An auction rate security (ARS) typically refers to a debt instrument (corporate or municipal bonds) with a long-term nominal maturity for which the interest rate is regularly reset through a dutch auction. Since February 2008, most such auctions have failed, and the auction market has been largely frozen.
The collapseoftheauction-rate securitymarket doesn't reflectnewly discovered problems with the borrowers: the Port Authority is asfinancially sound today as it was amonthago.