Another week and it's been another bunch of failed auctions for bonds previously issued by the Montana Higher Education Student Assistance Corp. to finance student loans.

Failed auctions this week totaled $233.4 million, including $181.5 million in previously issued tax-exempt MHESAC-issued bonds last week, and $51.9 million in taxable bonds.

In fact, it's the second go-around for these auction bonds, which failed to resell 28 days ago, said Jim Stipcich, chief executive officer of MHESAC's business manager, Student Assistance Foundation.

"These are the first of the previously issued MHESAC auction bonds to cycle through the auctions for the second time," Stipcich said. "Some of the tax-exempt bonds will cycle through for the second time next week as a result of their 35-day cycle."

As of Friday, auctions of $1.29 billion of MHESAC's previously issued bonds have failed to resell the past month because of the credit and liquidity squeeze on Wall Street. Most bonds sold in auctions used to finance student loans, hospitals, museums and other public needs in a number of states have failed to resell over the past month.

These so-called auction-rate bonds, sold in $100,000 units, are considered long-term debt, but they roll over every 35 days when interest rates are reset to match the market rate.

The same institutional investors that owned the bonds can repurchase them at the new interest rate, and the cycle continues. However, they can also choose not to re-buy the bonds and sell them to another institutional investor at an interest rate set by a preset formula based on certain market indices.

But few institutional investors on Wall Street are repurchasing the bonds, and these investors can't find anyone to buy them.

As the Wall Street Journal reported Friday, "Last month, several auctions failed, driving up interest rates for issuers such as municipalities, student-loan providers and museums. The collapse of the auction-rate securities has left investors locked into those illiquid investments."

Bloomberg.com reported Friday that its calculations showed that "more than 67 percent of auctions that include cities, colleges, hospitals, student lenders and closed-end funds failed this week."

"The market became unhinged last month after dealers who supported the securities for more than two decades stopped bidding for bonds investors didn't want," the Web site said.

Over the past month, only $30 million of previously issued MHESAC taxable bonds were resold at auction rate auctions. Auctions on more than $1 billion worth of other bonds previously issued by MHESAC have failed.

Despite the difficulties, Stipcich again said students shouldn't be affected this fall.

"We would like to emphasize that MHESAC has financing in place for Montana students for next fall -- $175 million for the 2008-2009 academic year -- and we do not anticipate any impact on the availability of such MHESAC funds for providing student loans to Montanans," Stipcich said.

While MHESAC has nearly $1.3 billion of its debt in auction bonds, it has $900 million of its portfolio in other investments.

MHESAC has $725 million invested in fixed-rate bonds or bonds financed at a fixed spread over a given index. Its other $125 million is invested in variable-rate demand notes issued in December 2007. These require a third party to buy them if sellers want to sell the notes and other buyers don't emerge.

Stipcich has said MHESAC is working to find ways to refinance a large part of its outstanding auction bond securities.