Financial Times FT.com

US muni market hit by capital freeze

By Nicole Bullock in New York

Published: September 25 2008 22:48 | Last updated: September 25 2008 22:48

Financing for US states, cities and other municipalities has ground to a halt and borrowing costs have risen as the latest chapter of the credit crunch unfolds.

The upset in the public finance market is a symptom of the overall lock-down on capital this week as the bankruptcy of Lehman Brothers and uncertainty about a Federal bail-out has indiscriminately drained liquidity from the financial system.

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