MuniLand

Best of muniland on Twitter

Here are the best tweets with the #muniland hashtag for June 18, 2014:

 

 

 

Talking to Robert DiMella of MacKay Shields

I had a chat with Robert DiMella, a senior managing director of fixed income manager MacKay Shields. DiMella brought MacKay Shields to New York Life in 2009 with $400 million of assets under management. He now manages close to $10 billion there. Retail investors typically buy and hold municipal bonds, but mutual fund managers like DiMella get paid to move from overvalued to undervalued bonds and take advantage of market mispricings. I had a peek into his operation.

Choosing bonds is about the underlying strength of the issuer. DiMella’s group references but does not rely on credit ratings. DiMella thinks that there is too much fear of rate increases and, like Blackrock fund managers, he does not think they are likely.

There may be value in more credit-sensitive parts of the market, like non-investment-grade high-yield bonds. The wide risk premiums seen in high yield are not legitimate, according to DiMella, who thinks they come from fears generated by Detroit and Puerto Rico. Investors are less willing to buy high-yield bonds because they are not comfortable with the risk. “Don’t take duration risk, take credit risk,” said DiMella. Translation: buy lower-quality bonds, but not long-dated bonds.

Best of muniland on Twitter

Here are the best tweets with the #muniland hashtag for June 17, 2014:

 

 

 

Best of muniland tweets

Here are the best tweets with the #muniland hashtag for June 16, 2014:

 

Moody’s rates first TOB that passes Volcker rule

Fears that a $75 billion corner of the municipal bond market for Tender Option Bonds would be closed down by the Volcker Rule may have been squashed with a new deal from Bank of America Merrill Lynch. The tiny $8.545 million deal has been structured to comply with Volcker Rule restrictions by using two loopholes in the Investment Company Act of 1940.

BofA’s new Tender Option Bonds (TOB) creation has received Moody’s Aaa/VMIG imprimatur. If regulators approve the new structure, it could be a template to restart the dormant TOB market.

Here is an example of a general TOB structure from Nuveen. The Volcker Rule does not apply to Nuveen, but the TOB structure is roughly equivalent to all muniland issuers.

Best of muniland tweets

Here are the best tweets with the #muniland hashtag for June 13, 2014:

 

Best of muniland tweets

Here are the best tweets with the #muniland hashtag for June 12, 2014:

 

Another tool to make people more comfortable

 

After the launch of the MSRB’s new price discovery tool on EMMA I chatted with Executive Director Lynnette Kelly about it and other transparency initiatives. Kelly led the launch of the EMMA website in 2008 and she has continued to champion its expansion to increase transparency in the municipal market. Kelly said that the new and better EMMA was “another tool to make people more comfortable owning municipal bonds.”

It’s astonishing how much transparency muniland has today compared to the pre-EMMA days. Back then, finding offering documents for new bond issues meant searching through a diffuse set of document libraries and waiting for a hard copy to be mailed. Trade data was available, but it was in a very crude, unusable form for retail investors. EMMA is much more than bond documents. Here is the official description:

Best of muniland tweets

Here are the best tweets with the #muniland hashtag for June 11, 2014:

 

Big data improvements at the MSRB

The fine folks at the Municipal Securities Rulemaking Board, led by director of product management Justin Pica, have launched some fantastic improvements for the MSRB’s market data and bond document platform EMMA.

Navigate to the three new major functions on the site with a CUSIP ID:

1. The ability to see trades for a specific security aggregated for one day with trade count, total par traded and high and low price and yield (top right box).

2. Chart trade prices (lower left box).

3. The price discovery tool allows an investor to compare up to five similar securities from comparable issuers with similar terms and credit quality (lower left box).

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