“Muniland a quiet backwater today”

By Cate Long
August 8, 2011

Muniland was quiet today as market participants confined the bloodbath to the equity markets. Investors mainly sat on the sidelines and benchmark yields were unchanged. The Thomson Reuters Municipal Market Data 10-Year AAA Scale closed at 2.38%, unchanged from Friday. Reported volumes were light.

Muniland likely resilient to U.S. downgrade

By Cate Long
August 8, 2011

It’s a little frustrating to hear commentators outside of muniland bash all municipal bonds as though they were a homogenous asset class. AOL’s Daily Finance ran a quote from the top regulator at the Municipal Securities Rulemaking Board, who is pushing back on this idea:

Supporting less prosperous brethren

By Cate Long
July 29, 2011

There are many financial linkages between various levels of government in muniland but everyone eventually has to stand on their own. It’s like the cousin you grew up with but don’t see much now other than holidays. When your cousin loses their job and their mortgage is being foreclosed you want to help but in a limited way. You want the cousin to get a job and cut a deal on their mortgage or do a short sale. You don’t want them moving into your home or having access to your bank account. It’s the same between the federal, state and local governments. They are cousins. But not that close.

Markets hold the whip, but are they rational?

By Cate Long
July 27, 2011

There has been a lot of discussion over the past few days about whether the United States deserves a triple-A rating. The weak and meandering attempts of the Congressional leadership and President Obama to reach a consensus on raising the debt ceiling has prompted this storm of confusion. The political theater is painful.

Know your debt load

By Cate Long
July 20, 2011

A quick and dirty way to evaluate the credit quality of a borrower is to look at his debt load relative to revenues. It’s not a perfect measure — it doesn’t take into account whether that debt is repaid over many years or whether it’s all due at once, for instance — but it suggests why investors view some states as better risks than others. I’ve made a set of charts so we can compare debt loads and revenues for the states in a simple, visual way. The amount of debt load is indicated by the full height of the bar. (Please note the vertical scales of the charts vary. California is the highest borrower by far.)

Proximity to the madness

By Cate Long
July 19, 2011

More alarms are ringing in muniland today. Moody’s issued a statement announcing that it was putting on review five states which have Aaa ratings. Aaa is Moody’s highest rating, and the agency is concerned that knock-on effects from the federal government could weaken the ratings of these states.

Property taxes are all over the map

By Cate Long
July 14, 2011

From Credit Sesame (click through the map above for an even better interactive version):

If you’re bad, you pay

By Cate Long
July 13, 2011

If you’re bad, you pay

Ever wonder why fixed-income investors are often called “bond vigilantes?” Just as a banker charges a homeowner with a bad credit history a higher mortgage rate, bond investors make borrowers pay more if they have a heavy debt load and weak revenue sources. Investors use higher interest rates to crack down on borrowers; the interest rate is higher because there is more risk.

Quis custodiet ipsos custodes?

By Cate Long
July 5, 2011

Quis custodiet ipsos custodes? Or “who watches the watchmen?” Credit-rating agencies are the main watchmen of the financial system.  But can we judge their performance, or are they just black holes filled with “opinions?”

Has Chris Christie “fixed” the problem?

By Cate Long
June 28, 2011

Has Chris Christie “fixed” the problem?

Joan Gralla of Reuters reports that Governor Chris Christie will be signing the pension and health-benefit reform law today. This is an important step for the health of New Jersey’s pension plans, and Governor Christie should be lauded for his accomplishment.