MuniNet Guide Archive
The Selling of Puerto Rico’s Sales Tax Bonds
Since the October 15th webcast, the Commonwealth of Puerto Rico has certainly come through on its pledge to improve its disclosure practices. Particularly when it comes to its only lifeline to the capital markets- i.e., the sales tax financing structure also known as Cofina, the Puerto Rico GDB is not taking any chances.
Immigration and Domestic Migration Affect U.S. States Differently
by guest contributor Peter Fugiel, Ph.D. After years of stalemate, it appears likely that immigration will be debated seriously in the U.S. Congress. The current law’s favoring of close relatives rather than employment-related immigration will likely be examined, and...
Estimating Puerto Rico’s Probability of Default
In sharp contrast to prior months, this week’s FOMC meeting should be met with much less anxiety on the part of market participants. Both the equity and fixed-income markets have settled into a fairly comfortable groove. Plus … The Puerto Rico rating conundrum illustrates the difficulty of estimating default probabilities for municipal issuers. Given the SEC’s new requirements under Dodd-Frank to reduce reliance on agency ratings, the race is on among muni research firms to come up with viable alternative credit scoring systems.
Is Tax Policy to Blame for Puerto Rico’s Woes?
In the absence of real market-moving economic data, at least until the October employment number is released, the fixed-income market continued to enjoy a firm tone this week. Plus … While the market pressure on Puerto Rico may have abated for the time being, the political and regulatory backlash may just be starting.
Six Reasons to Visit the New GASB Website
Until recently, the Governmental Accounting Standards Board (GASB) website was rather intimidating to anyone without a degree in finance or accounting. That is no longer the case, thanks to an impressive “new and improved” website that offers greater functionality and...
Muni Supply Returns with a Vengeance
With the reopening of the Federal government, the flow of economic data has resumed in earnest. The first major release out this morning was the September payrolls number, originally slated for October 4th. According to the Bureau of Labor Statistics, non-farm...
Who Files Annual Financial Audits Faster: Large or Small Municipal Bond Issuers?
The logic can work both ways; one the one hand, it might make sense that a small municipal bond issuer with a relatively simple financial ledger would be able to complete its annual financial audit faster than a larger issuer with more complex financial structure. On...
Puerto Rico Makes Its Case
As expected, the dramatic events in Washington did go down to the wire on Wednesday, and we still ended up with no permanent solution. Although a default on the national debt may have been averted, our politicians’ decision to kick the can down the road yet again may...
Another “DIP” for Detroit Unsecured Bondholders
Today marks the beginning of what could turn into months of hearings regarding Detroit’s eligibility to file for bankruptcy. In the meantime, the City continues to break new legal ground by using restructuring techniques heretofore used only in the corporate arena. Plus – could Puerto Rico fall below investment grade by at least one of the rating agencies before the end of the year?
Retail Investors and the Puerto Rico Debacle
Market Outlook There’s nothing quite like ugly poll numbers to motivate politicians. Faced with unprecedented disapproval ratings from the electorate, our fearless leaders in Washington have reportedly decided to return to the negotiating table to work out at least a...
State Pension Plans: A Critical Pressure Point for Many States
What constitutes a well-managed state pension plan? Our interview with the author of a recent Morningstar report on the state of state pension systems, who discusses the wide variance in the funding levels of state pension plans, along with “best practices†observed from states with relatively strong pension plans.
Munis and the Debt Ceiling Debate
Market Outlook One week into the Federal government shutdown, the fixed-income markets appear to be taking all the uncertainty in stride, although their patience may start to fray the closer we get to the dreaded October 17th debt ceiling deadline. With many key...
Does Municipal Bond Credit Quality Impact Annual Audit Times?
Increased attention on local government fiscal stress and Chapter 9 bankruptcy filings has heightened concerns over municipal bond credit quality in wider circles than ever before. But while the Securities and Exchange Commission (SEC) requires certain issuers of...
Richmond, California’s Use of Eminent Domain to Buy RMBS Mortgaged Properties May Do More Public Harm than Good
The issue of eminent domain is presently being raised in Richmond, California. Who benefits most from eminent domain: Main Street or Wall Street? The way this issue unfolds in Richmond may influence other municipalities considering its use.
Can Puerto Rico Tax Its Way out of a Recession?
Market Outlook It has come down to this: Day One of a federal government shutdown. The longer this latest Washington political debacle goes on, the greater the chance it will derail the nascent U.S. economic recovery. The showdown in the nation’s capital may have a...
The New Risk/Reward Equation in Munis
All eyes are on Washington this morning as market participants focus on the potential government shut-down and the fiscal restraint that is bound to come out of current budget negotiations. All of this uncertainty has had the expected effect of pressuring equities and...
Munis Go from Depression to Elation
Market Outlook Happy times are back in the bond market, at least until the next payrolls report on October 4th. In the absence of significant economic data, fixed-income traders have been able to maintain the positive momentum from last week’s “No Fed Taper” rally....
With No Taper, Munis Outperform Treasuries … For Now
Market Outlook In technical terms, it was purely and simply a “wimp-out.” After leading global financial markets into the red zone, the Fed shockingly chose to punt (okay, shaky football analogy, but you get the point). Going into Wednesday’s FOMC meeting, Fed...
Muni Market Rallies on Shrinking Volume Forecasts
Market Outlook Larry Summers, we hardly knew ye. Or perhaps we know you too well? The succession issue at the Fed and the prospect of a Summers nomination as Chairman have been weighing on the financial markets. As they say, markets hate uncertainty and Summers has...
Mining the Web: A Closer Look at Long-Term Unemployment
There’s unemployment, and then there’s long-term unemployment. Over one third of the nation’s unemployed workers has been out of work for more than six months, according to the Urban Institute, in a recently released interactive feature entitled, “27 Weeks and...
Time to Start Getting Excited About Munis Again?
Market Outlook One of Verizon Corp.’s most recent slogans is “Rule the Air.” Apparently, the telecom company also ruled the bond market for a few days this week. With the benefit of hindsight, it appears some of the recent spikes in Treasury yields, even after last...
Detroit’s Bankruptcy and Pension Solution Depends More on its Planned Recovery and Rebirth – Not Just Cutting Costs
Against a backdrop of its Chapter 9 bankruptcy filing, Detroit is at a crossroads; but a sound Recovery Plan and reinvestment into infrastructure and government services can help bring the Motor City back, and position it for a brighter future.
Puerto Rico Paying Dearly for Bungled Disclosure Efforts
Market Outlook Over the past two sessions, the Treasury market has been drawing support from a disappointing August payrolls number and from the flight-to-quality bid related to the potential U.S. strike on Syria. This morning, the Russian government has apparently...
Does the ACA Pose a Health Risk to State Finances?
The Patient Protection and Affordable Care Act (ACA) was passed by Congress and signed into law by President Barack Obama on March 23, 2010. The Act includes many changes to the way Americans receive and pay for health care coverage. Specifically, the ACA mandates...
Fear-Mongering in Today’s Municipal Bond Market
The municipal market’s retreat started in May with the general bond market rout related to the potential end of the Fed’s quantitative easing efforts. However, it has picked up steam over the past two months on more idiosyncratic grounds: the Detroit bankruptcy filing and, more recently, renewed concern about the potential systemic risk posed by Puerto Rico.