An informal market is springing up online for the IOUs that cash-strapped California began issuing last week, attracting the attention of regulators and state officials. Meanwhile, the state’s bonds moved a step closer to “junk” status because of the budget mess that has prompted the state to pay tax refunds and other obligations with the vouchers.

Would-be buyers of the scrip, officially called registered warrants, have expressed their interest on Web marketplaces including Craigslist and EBay.

Selling an IOU at a discount this week would appear to be a bad deal because many of California’s banks have said they would redeem IOUs at face value for their customers at least through Friday.

Starting next week, however, some IOU recipients whose banks are no longer accepting them might resort to selling them at less than face value.

Responding to the proliferation of offers to buy the warrants, state Treasurer Bill Lockyer’s office said Monday that it wouldn’t redeem IOUs sold by one person to another unless they were accompanied by a notarized bill of sale signed by the original recipient.

Read the Original Story – Trading of California IOUs catches regulators’ eyes – Los Angeles Times

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