Denver’s high interest payments are its own fault

By Cate Long
April 23, 2012

The Denver Business Journal is reporting an astonishing story about the Denver Public Schools paying 6.17 percent interest on $396 million of floating rate bonds that were part of a larger bond offering in 2011. The bonds were issued to fund a required contribution to the school system’s pension fund:

Detroit’s derivatives slip through the net

By Cate Long
April 18, 2012

If you were thinking of buying some of the city of Detroit’s bonds, you might want to tread lightly. Although the city was able to come to terms with the state and avoid the appointment of an emergency manager, it still faces enormous challenges. The biggest threat to Detroit’s fiscal stability is the risk that its derivatives counterparties will activate triggers in their interest rate swaps. If this happens, the counterparties will force a lump-sum payment, draining cash from an already shaky situation.

Muni CDS goes ‘bang’

By Cate Long
April 4, 2012

The use of credit default swaps in muniland is poised to take off, a project that’s being called the “U.S. Municipal CDS Bang.” Starting Apr. 3, the terms and conditions of new muni CDS have been standardized with the stated intent of creating a useful risk-hedging product. This project is being driven not by regulators but by Markit, a private market-data vendor, and the International Swaps and Derivatives Association, a global consortium of Wall Street banks. But it’s not so clear that this is what the market needs at this time.

Green shoots?

By Cate Long
June 29, 2011

Green shoots?

Reuters reports on recent data from the U.S. Census Bureau that shows how tax revenues are improving:

Muni sweeps: Riding the Federal cash flow

By Cate Long
April 25, 2011

It’s an important week  for the fixed income markets: Ben Bernanke, the chairman of the Federal Reserve, will hold his first press conference on Wednesday.