New austerity and confidence in Puerto Rico

July 18, 2014


Five months after Puerto Rico officials talked publicly to market participants, they held an investor call on Thursday with over 2,000 people. The call was captured by Storify. Puerto Rico’s previous call in February rallied market enthusiasm for a $3.5 billion general obligation bond offering that was priced on March 8. The March deal, the largest speculative grade bond deal ever done in muniland, replenished the coffers of the fiscally debilitated island.

Why it is so expensive to trade muni bonds?

July 16, 2014

Why is it so expensive to trade municipal bonds? We finally have some answers from a long awaited MSRB report on trading in the opaque muni bond market. The study was conducted by former SEC Director of Enforcement Erik Sirri. It maps where bonds go before they settle into retail customer accounts. Every time the bonds change hands, the price is marked higher. In the dark muni market, nobody sees this happening.

Municipal bond funds will survive a Puerto Rico shakeout

July 9, 2014

Puerto Rico

Barron’s had a recent story, “Puerto Rico’s Debt Woes Could Spread,” that says, “As mid-year statements go out, muni-fund redemptions could force selling of other credits.” Barron’s author Randall Forsyth wrote:

Closing the door on the first half of 2014

July 3, 2014

U.S. Censys Bureau

The first half of 2014 was positive for muniland after a very tough 2013, but weak spots still remain.

Puerto Rico ring fences its public corporation debt

June 26, 2014

Puerto Rico

In a dazzling effort, Puerto Rico Governor Alejandro Garcia Padilla presented legislation to restructure the debt of several public corporations. Both the Puerto Rico Senate and House approved the measure and pushed it to conference where statutes require that it be reconciled by the end of the legislative session on June 30. Seldom have financial markets seen such an elegantly choreographed approach to haircutting sovereign debt.

A revolution in muniland

June 23, 2014

Goldman Sachs

In a speech last week at the Economic Club of New York, SEC Chairman Mary Jo White set out three new initiatives that will reorder the way fixed income markets serve retail investors.

Talking to Robert DiMella of MacKay Shields

June 17, 2014

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.

Another tool to make people more comfortable

June 11, 2014

Big data improvements at the MSRB

June 10, 2014

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.