Going going gone

The auction rate security market has been virtually frozen over the past two months, but little detail has emerged as to why this has happened. With the instrument looking to be on its last legs, Peter Madigan reports on why the gavel may have fallen for the last time


The liquidity drought that paralysed credit markets in December and January appeared to be receding a little during February, when the US auction rate security (ARS) market emerged as the latest victim of the credit crunch.

The little-known market, worth just $331 billion, unexpectedly hit headlines as municipal bonds issued by local governments, hospitals, schools and airports in virtually every US state suddenly found themselves contending with drastic hikes in interest rates as liquidity in

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