The perils of unrated municipal bonds

February 2, 2013

It is extremely rare to see a muniland market professional pitch a specific bond to the public. In fact, I’ve never seen an analyst or a portfolio manager do it in the general media. So I was more than a little shocked to see Alexandra Lebenthal pitching a newly issued unrated bond on Maria Bartiromo’s show on CNBC.

California gets a little lovin’

February 1, 2013

The state of California received some good news this week when credit rating agency Standard & Poor’s upgraded the state’s long-term rating to “A” on its $73 billion in general obligation (GO) bonds (a single A rating is four notches below AAA). It’s certainly a feel-good moment for Governor Jerry Brown and other public officials. The municipal bond market has been anticipating the state’s improving credit position for the last year, as you can see in the chart above. It shows that the extra interest cost (over the AAA gold standard) on the state’s bonds has declined in the last year. The Golden State is getting some sunshine in muniland.

The big muniland tax exemption dud

January 10, 2013

Alarm bells are ringing across muniland because the discussion about capping the municipal bond tax exemption at 28 percent has surfaced again. Bloomberg reports:

Muniland’s greatest hits of 2012

January 8, 2013

The municipal bond market is one of the smaller corners of the bond market. It is dwarfed by the U.S. Treasury, government-sponsored organizations, mortgage and corporate bond sectors. Yet, muniland is larger than the equity market, as the data above (2011 and 2012 3Q year to date) shows, and it probably has more issuers than every sector combined. Muniland is a hopping place.

The SEC rounds up muniland’s bad guys

December 20, 2012

The SEC – the top law enforcer for muniland – has been riding the range. With 17 municipal securities enforcement actions in 2012, the SEC cops have come up with a nice collection of scalps.

Get ready for more public toll bridges and roads

December 13, 2012

Governor John Kasich of Ohio and Governor Steve Beshear of Kentucky are forming a bi-state team to research funding options to replace the 50 year-old bridge that crosses the Ohio River and connects their states. The Brent Spence Bridge carries about double the volume it was designed for on Interstate 71. It is an example of valuable U.S. infrastructure in need of replacement. The big question is where the funds will come from. AP has the story:

California moves toward open source ratings for city bonds

December 6, 2012

In the past year, three California cities have filed for bankruptcy. This casts a pall on the bonds of other California cities, because investors wonder if they also contain buried fiscal issues. In an effort to create more transparency, a new open source ratings project was recently launched:

Time to ride the muniland tax exemption pony

November 9, 2012

Will Atlantic City’s Revel be washed away by Sandy?

November 1, 2012

Muniland’s flight risk

October 31, 2012

I’m not a big fan of municipal bond-related mutual funds because some of their structural features work the opposite way that municipal bonds work. Mainly, the value of muni bond funds decline as interest rates rise. The has a useful description: