The interest rate, or the yield on treasuries.
But we can plot yield curves for a host of different securities, and
that's what I've done on this next slide, is I've got three different yield curves.
The blue curve is the yield curve for high quality corporate debt, all right?
So you can see that for, what do I mean by high quality?
That's investment grade, think triple B or higher, okay?
So when high quality or highly credit rated firms were borrowing for say,
29 years, it's costing them about 5% per annum at least as of July 2014.
Whereas when they're borrowing short terms,
say two years, it's a little over a percent.
The green curve is the yield curve for
municipal bonds, AAA rated municipal bonds as of July 2014.
And then the red curve is the treasury curve.
And what's sort of interesting to note Is that the yields or
the cost of borrowing appears to be higher for the federal government
over at least certain periods, than it was for municipalities.
Which is strange if you think that our federal government is a much safer
bet than a municipality, even a triple A rated municipality, but what's going on
there is mostly a tax differential as well as some liquidity issues.