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.
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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.
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.
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.
Bond Insurers’ Breakthough Settlement in Detroit
Having outperformed Treasuries over the last two weeks, the municipal bond market is in a state of limbo currently, as cross-market valuations are no longer compelling. A modest backup in yields may actually be a welcome development at this point.
Can a TV Show Impact a City’s Economy?
In the broadest sense, cities that provide the landscape for a television series – or a movie – benefit in both tangible and intangible ways. The increased publicity for and awareness of a city – particularly if portrayed in a positive light – often lead to concrete benefits such as increased tourism, greater economic development opportunities, and perhaps even an influx of residents. Other tangible economic rewards come as a result of on-location filming and production.
Puerto Rico’s Retail Trading Mess
The municipal yield curve flattened dramatically in sympathy with the recent movement in the Treasury curve. This quasi-instantaneous response move was rather surprising for the normally slow-moving tax-exempt market; could a new age of muni volatility be upon us? Plus … When it comes to Puerto Rico, there is never any dearth of controversy, it seems.
Puerto Rico’s Mega-Issue: A Post-Mortem
As we like to say in the investment business, there often comes a point where fear in the marketplace turns into greed. The Commonwealth of Puerto Rico found that inflection point this week with its epic high yield G.O. issue … At the risk of stating the obvious, once the imminent threat of restructuring receded, the 8.00%+ yield proved too irresistible, even to those who couldn’t take advantage of the triple tax exemption.
Record “High Yield” Puerto Rico Deal Looms as Muni Supply Returns
The supply outlook in the tax-exempt sector brightened considerably this week as the new issue calendar returned to a more normal level of about $5 billion. Next week, the muni market’s attention will be fixated on the new Puerto Rico GO issue, slated to price on Tuesday, March 11.
MuniNet Fondly Remembers Peter Fugiel
Every now and then, you meet a person who affirms your faith in humankind. Peter Fugiel was that kind of man. On Sunday, March 2, we lost our good friend and a veteran of the municipal bond industry. Throughout his illness, his concern for others never waned, not even...