This month saw more of news about financial market volatility. The Month’s municipal bond news included:
- 3/2/12: Stockton Going Broke Shows Cop Pay Rising as Property Collapsed – Stockton, CA may be the next major US city to file for bankrupcy under chapter 9. The City has $450 million in unfunded liabilities for retirement costs. They are doing everything they can including working with a mediator to avoid bankrupcy. Obviously, holders of their $702 million municipal bond debt may see delayed payments or haircuts to principle.
- 3/7/12: SmartMoney: Watch Out! These Municipal Bonds Come With a Bit of a Kick – WSJ.com. – A slightly more interesting municipal bond known as kicker bonds or cushion bonds are becoming more popular. The interest rate paid by these bonds goes up and down with these current interest rate. The downside is that if the issuer calls the bonds early, the owner could be left with no bond and their cash back, sooner than expected. See this article for details.
- 3/8/12: S&P Rethinks Ratings System for Some Muni Bonds – WSJ.com. – S&P is changing how it rates the general obligation bonds of towns, cities, and counties. This change will results 32% having better ratings and 3% having lesser ratings.
- 3/23/12: Small-Town Lockups Without Prisoners Send Bonds Into Default – Bloomberg. – Beware of municipal bonds for prisons. Some prisons have run into financial difficulty and are not even open anymore.