This month saw more of news about financial market volatility. Tax day has come and past. The Month’s municipal bond news included:
- 5/7/12: Illinois Bonds Draw Big Interest – WSJ.com. – Illinois sold a whopping $1.8 billion in Municipal Bond debt last week. It had to price them 1.75% higher than the benchmark rate. S&P had previously warned that it may cut Illinois rating from the present A- due to continued problems. It seems like investors are desperate to get any yield these days.
- 5/6/12: Bond firms’ campaign gifts linked to sales pacts. – Major companies who were competing for California Bond underwriting donated $1.8 million to school districts and ended up getting hired for a majority of the projects. At least they didn’t take them to strip clubs!
- 5/16/12: Assured Guaranty is slated for a possible credit rating downgrade to single A from Aa3. If they are downgraded, it may lower demand for their insurance from Municipalities. Individual investors may be less willing to buy Muni Bonds due to bonds not being insured. In 2011, 5.2% of new Municipal Bond issues had insurance. A fairly small number, investors have understood that they need to do their homework on the bonds quality and not value insurance that much.
- 5/18/12: Cities are getting more savvy with Municipal Bond buyers. Chicago recently had a luncheon to help assure investors that their working hard to make things right. Other cities following the same tack, appear to have calmed investors and perhaps even lowered interest costs that they had to pay.
- 5/24/12: Treasuries Losing Appeal With Widest Yield Penalty: Muni Credit – Businessweek. – 10-year tax-exempt muni bond yields rose to 108% of those on Federal debt last week, the highest since Dec. 2. This makes municipal bonds more attractive than Treasuries for most people.
- 5/30/12: MSRB Launches Online Investor Toolkit – MarketWatch – The MSRB has added some very useful tips for individual investors interested in municipal bonds. They are helping to educate individuals on this very confusing marketplace full of hidden risk and markups.