MuniNet Guide Archive
PREPA Dodges Another Near-Term Bullet
Market Outlook The recent “risk-off” rally in bonds, driven by geopolitical issues in the Gaza and the Ukraine, has proved short-lived. The benchmark 10-year Treasury has failed to hold below 2.50% and is now back in its familiar 2.50-2.70% range (it closed at 2.58%...
PREPA in the Crossfire – Webinar Replay Available
In case you missed it ... A webinar, featuring an independent panel discussion on the challenges, potential default, impending restructuring and outcomes for the Puerto Rico Electric and Power Authority (PREPA) took place on July 30. Panelists included: Gary...
Muni Revenue Bonds: Lessons from Detroit and Puerto Rico
Market Outlook Geopolitical events are, first and foremost, human tragedies. So it’s only appropriate for us to start this week’s column by sending our thoughts and prayers to the victims from both sides of the Gaza conflict, as well as those unfortunate passengers of...
Detroit’s Bankruptcy Repudiation of COPs Defies History
Detroit’s repudiation of its COPs in bankruptcy is not supported by the history of government finance in the U.S. Repudiation of debt by states or local governments is not new, dating back as far as the early 1800’s. The lessons learned from that repudiation should not be forgotten.
Puerto Rico Goes on a Charm Offensive
Market Outlook The Treasury market continues to provide a reasonably stable backdrop to all fixed-income markets, with the 10-year bond still ensconced, as it has been for a while, in a 2.50-2.70% trading range. Fed Chairwoman Janet Yellen reiterated her low rate...
Munis Hit by Puerto Rico Fallout, Again
Market Outlook As we headed into the long holiday weekend, there was a definite feeling among muni market participants that the Puerto Rico (PR) crisis has now entered a critical new phase, and that the attendant uncertainty could once again derail all the positive...
Puerto Rico’s “Willingness to Pay” Issue
Muni investors were sitting on pins and needles Tuesday morning and it was not all about the outcome of the USA-Belgium World Cup match. Weighing on their minds was the question of whether or not, in the wake of last week’s events, PREPA would be making payment for the July 1st coupon on its debt. A non-payment, of course, would constitute the largest muni default to date, eclipsing the Detroit case. It would also send a clear message that PREPA intends to seek imminent relief under the new “bankruptcy law†for public corporations.
Crunch Time for Puerto Rico’s Public Corporations
Just when muni traders thought they could enjoy the tax-exempt market’s tremendous performance to date and just focus on World Cup drama, Puerto Rico is once again making the headlines. Earlier this week, the Governor and his staff made an about-face and threw their support behind a proposed law to restructure PR’s public corporations. At this writing, the proposed law was reportedly passed by the PR House at midnight on Wednesday night.
State Universities Increase Reliance – and Price Tag – on Tuition
By Richard Ciccarone In a few months, the class of 2018 will matriculate at colleges and universities around the country. The four years of classes, football games and extracurricular activities will pass quickly; upon graduation, these students will be faced with...
Municipals at Another Interesting Juncture
As we head into the mid-year mark, the municipal market has once again proven its resilience with a head-turning rebound coming on the heels of a disastrous 2013. Year-to-date through June 17, the S&P National AMT-Free Municipal Index is up an impressive 5.32%,...
5 Interactive Maps and the Questions They Answer
by Mardee Handler Dating back to the early explorers, maps were tools used to help uncover buried treasures... Now, many maps have become treasures in their own right. If a picture is worth a thousand words, an interactive map can often encapsulate an entire story,...
Puerto Rico Scrambles to Plug Budget Hole as Unions Flex Their Muscles
Do ratings on Puerto Rico issuers matter anymore at this stage? Yesterday, Fitch downgraded PREPA one notch to “BB” while keeping the issuer on negative watch. Certainly, for an entity that’s widely viewed as a restructuring candidate (and one that actually ran out of...
Puerto Rico: The View from the Ground
Given the disappointing downturn in Puerto Rico’s April Economic Indicators after several months of relative stability, we decided it was time we made it down to the Island and observed for ourselves what the real situation is on the ground. After all, there’s only so...
Liquidity Concerns at PREPA
Market Outlook As the month of May comes to a close, the U.S. bond market continues to confound all pundits with a major technical breakout below the 2.50% mark. In fact, the 10-year Treasury yield, currently sitting at 2.41%, a new low for the year, has become a news...
New Data on State and Local Government Pension Systems Requires a Closer Look
How did the nation’s state and local government pension systems fare last fiscal year? In its 2012 Survey of Public Pensions: State & Local Data, the U.S. Census Bureau provides a detailed analysis of the 227 state-administered pension plans and 3,771 locally...
Direct Bank Lending to Muni Issuers: A Step Backward in Disclosure
Market Outlook The bond market is having the last laugh. All market participants went into this year bearish on bonds and, at least so far, have ended up with eggs on their face. The surprising drop in rates over the past few weeks has led many to wonder if the...
What Are Current Employment and Housing Trends Telling Us about the Economy?
Employment and housing trends often predict and reflect the fiscal strength of state and metro areas. Shifts in employment and housing patterns often occur in tandem, according to Bradford Langs, CFA, Chief Risk Officer at CoastalStates Bank in Hilton Head Island,...
Could Rhode Island and Puerto Rico Share the Same Rating?
Market Outlook On the back of a powerful rally since February, the municipal market is now on track to erase most of the losses incurred during last year’s selloff. Since September 9, 2013, the high yield water mark from last year, the benchmark AAA yields, according...
Of Michael Lewis and Today’s Muni Market
Last Friday, the fixed-income market reacted in rather surprising fashion to a very strong April employment report: it actually rallied, pushing the benchmark yield on 10-year Treasuries down near the low for the year … Plus, thoughts on Michael Lewis’ “Flash Boys: A Wall Street Revolt†and its implications for the municipal bond market.
The Tug-of-War between Cities and Suburbs
by Mardee Handler, managing editor From the nation’s most densely population urban centers to outer-ring suburbs, the U.S. population continues to shift, while the concepts of urban sprawl and smart growth remain hot topics in municipal circles. Well into the second...
Puerto Rico’s Historic “Balanced” Budget
Market Outlook With the new issue calendar continuing its recent seesaw pattern, muni market participants are left to ponder two significant events this week: the FOMC meeting and the reportedly “balanced” budget announcement from the Commonwealth of Puerto Rico. The...
Five Handy Online Calculators for Municipal Research
by Mardee Handler, managing editor We’ve come a long way from the abacus. The online world is not flat, which continues to increase the power of the Internet. Certainly, we can access vast amounts of information online. We can also, in a growing number of examples,...
Puerto Rico’s Historic “Balanced” Budget
As expected, PR Governor Padilla last night announced a “balanced†budget for fiscal 2015, the first in 20 years, featuring about $1.4 billion in public spending cuts, equal to roughly 14% of the FY 2014 budget.
Puerto Rico: Bond Purgatory and Tax Haven?
Market Outlook A range-bound Treasury market has helped municipals maintain a steady, positive tone over the past few weeks. However, the recent stretch of outperformance has also eroded the relative value of the tax-exempt sector, leaving it vulnerable to a...
Tobacco Bonds and Fiscal Gimmickry
April 15th is always a special date for us muni geeks, particularly those of us who are focused on the high yield tax-exempt market. Aside from serving as a reminder of the value of tax-exempt income, Tax Day is also the day tobacco companies make their annual Master...