”To move paper today you have to offer a bit more yield than you did earlier in the week,” a trader said. “There was one money manager in particular selling blocks in the 8- to 10-year range yesterday and today. That just looked like an unwind of"...continued [ report package w/email sign up ]

Firmer In Spots; News From Harrisburg
(INSIGHT: pub. August 31, 2010; 3:30p EST)
Municipal bonds posted minor gains 10-years and out today while the limited primary calendar continued to garner solid investor interest, meantime traders noted decent two-way flow in Street for BABs with less trading on the tax-exempt side:

”There is clearly a firmer tone 10-years and out today for tax-exempts,” a trader said. “Trading is"...continued [ report package w/email sign up ]

Quiet As PA Turnpike Launches
(INSIGHT: pub. August 31, 2010; 10:30a EST)
Municipal bonds were lightly traded with a firmer tone in spots once again while the Pennsylvania Turnpike Commission launched its Build America Bond deal:

”The muni market is very firm in spots but still quiet in the secondary,” a trader said. “The bid-side just continues to be there for the right pieces and there is not any selling pressure to speak of. With Blackrock closing on"...continued [ report package w/email sign up ]

Quiet With Some New-Issue Activity
(INSIGHT: pub. August 30, 2010; 3:30p EST)
Municipal bonds were very lightly traded but a firmer tone was apparent for bonds maturing 15-years and out as Treasuries rallied today:

”We still see dealers buying bonds at better levels when they can,” a trader said. “There are also several money managers that keep seeing"...continued [ report package w/email sign up ]

Quiet Start To Week
(INSIGHT: pub. August 30, 2010; 10:30a EST)
Municipal bonds were lightly traded with a firmer tone in spots in sympathy with the Treasury market this morning:

”Most traders are waiting to see what the week brings but with so little issuance for the next two weeks, the market should remain quiet,” a trader said. “The better Treasury market should firm munis. We have seen some"...continued [ report package w/email sign up ]

Pursuit of Safety and Yield Continued
(INSIGHT: pub. August 24, 2010; 3:00p EST)
The pursuit of safety and yield continued to drive investors. The theme is thus far unrelenting. The tax-exempt market continued to push toward its strongest August in more than 20 years, while aggressive high-grade offering levels reached distortions last seen in late May...continued [ report package w/email sign up ]

Investors Have Exited Money Funds
(INSIGHT: pub. August 23, 2010; 3:00p EST)
The financial markets’ focused on the herd mentality of the “new normal” in which investors have exited money funds for higher returns and left equity funds for the presumed safety of bond products.

Figure 1 illustrates that in 2010 taxexempt money market outflows have been nearly twice that of bond fund inflows...continued [ report package w/email sign up ]

Quiet With Firmer Tone Out Long
(INSIGHT: pub. August 20, 2010; 3:30p EST)
Municipal bonds were lightly traded today and generally little changed although there were a handful of stronger trades 10-years and out that led some to call that part of the market better:

”The market has been very quiet all day but we are seeing a few firmer block trades 15-years and out,” a traders said. “Some high-grades names like Minnesota’s or Washington’s have"...continued [ report package w/email sign up ]

Quiet To Start
(INSIGHT: pub. August 20, 2010; 10:30a EST)
Municipal bonds were lightly traded and generally little changed this morning although a few firmer transactions were noted in the secondary:

”There has not been much activity so far and a lot of trading floors feel half-staffed,” a trader said. “We’ve come a long way over the past month and a half and we are now"...continued [ report package w/email sign up ]

Minor Gains
(INSIGHT: pub. August 19, 2010; 3:30p EST)
Municipal bonds posted minor gains today in the wake of a taxable rally:

”With Treasuries rallying again and very limited general market calendar left this week and little next week with the exception of New Hampshire, this market continues to have some legs,” a trader said. “It now appears that"...continued [ report package w/email sign up ]

Unchanged & Quiet
(INSIGHT: pub. August 19, 2010; 10:30a EST)
Municipal bonds were lightly traded and little changed this morning while the major new-issues of the week are now completed:

”So far today the Street is very quiet and there has not been much follow through on recent issues,” a trader said. “It is giving me the impression that"...continued [ report package w/email sign up ]

Better Again With Help From Primary
(INSIGHT: pub. August 18, 2010; 3:30p EST)
Municipal bonds posted decent gains today on better secondary activity although it was strong bids on competitive loans that once again reinforced confidence in the market:

”Clearly the story of this week comes out of the competitive market,” a trader said. “Today we again saw dealers bid aggressively on deals and that helped"...continued [ report package w/email sign up ]

Munis Better Again
(INSIGHT: pub. August 18, 2010; 10:30a EST)
Municipal bonds saw more trading activity this morning and had a stronger tone as the Treasury market reversed much of yesterday’s losses:

”There is certainly more going on in the Street today than we had Monday or Tuesday,” a trader said. “Most of the North Carolina deal has been cleaned up while some"...continued [ report package w/email sign up ]

Bids On NC and FBE Make Impression
(INSIGHT: pub. August 17, 2010; 3:30p EST)
Municipal bonds were lightly traded in secondary markets but strong bids on competitive loans and the follow-through indicated gains for tax-exempts despite a sell-off in the Treasury market:

”You can’t ignore the levels on today’s largest competitive loans,” a trader said. “They were bid through the market and as the day progresses we are seeing"...continued [ report package w/email sign up ]

Quiet Open
(INSIGHT: pub. August 17, 2010; 10:30a EST)
Municipal bonds were very lightly traded and little changed ahead of North Carolina’s competitive sale slated for later this morning:

”The market went radio silent ahead of this North Carolina loan,” a trader said. “This deal has a lot of size inside of 10-years. What made for strength up front in the past month has been"...continued [ report package w/email sign up ]

Quiet Session With Minor Gains
(INSIGHT: pub. August 16, 2010; 3:30p EST)
Municipal bonds traded with a better tone in spots today on light activity while Treasuries rallied the entire session:

”While we are seeing very little flow today, the market is still quite firm,” a trader said. “I’m not sure how much weight the market should carry"...continued [ report package w/email sign up ]

Munis Better; Ohio & New Jersey Offer Retail
(INSIGHT: pub. August 16, 2010; 10:30a EST)
Municipal bonds began the week stronger while Treasuries rallied:

”The trading activity is not overbearing by any means for municipals but the strength in taxable markets can’t be ignored and the Street is stepping up,” a trader said. “For what is offered out there, there are"...continued [ report package w/email sign up ]

Modestly Better
(INSIGHT: pub. August 13, 2010; 3:30p EST)
Municipal bonds were lightly traded with a stronger tone while Treasuries rallied this afternoon:

”Activity has been limited today, especially this afternoon, but there have been enough block trades showing improvements to call the market better by a few,” a trader said. “Even before the"...continued [ report package w/email sign up ]

Firmer In Spots
(INSIGHT: pub. August 13, 2010; 10:30a EST)
Municipal bonds were lightly traded but with again a firmer tone this morning as much of the past two weeks of issuance continues to be put away at stronger levels:

”I can tell you that already this morning names like Minnesota were stocked along with Washington at relatively aggressive prices in front of a decent competitive calendar next week that includes"...continued [ report package w/email sign up ]

Firmer But Quiet
(INSIGHT: pub. August 12, 2010; 3:30p EST)
Municipal bonds were lightly traded but firmer today while Treasuries lost ground in the afternoon:

”The only real two-way flow we saw today was coming from recently issued bonds,” a trader said. “There have been a few other high-grades getting put away at slightly"...continued [ report package w/email sign up ]

Limited Trading; Limited New Issues
(INSIGHT: pub. August 12, 2010; 10:30a EST)
Municipal bonds were lightly traded with a firmer tone in spots today while taxable markets were mixed:

”There is limited trading in the Street right now but from what we have seen occur so far, there are a few accounts continuing to reach for bonds,” a trader said. “For example, we saw Wake County in 2022 trading this"...continued [ report package w/email sign up ]

Solid Gains Today; OWDA Launches
(INSIGHT: pub. August 11, 2010; 3:30p EST)
Municipal bonds posted gains today amid decent secondary flow while most new-issues also received strong investor and dealer support:

”The market is seeing strong buying interest today,” a trader said. “Deal balances, which had lingered in some cases from last week, have"...continued [ report package w/email sign up ]

Good Open For Munis
(INSIGHT: pub. August 11, 2010; 10:30a EST)
Municipal bonds opened with a positive tone and better secondary flow today while the remaining large deals of the week began the pricing process:

”The market is better yet again,” a trader said. “Most Street offerings were bumped more than yesterday’s printed curve movements and bonds are getting"...continued [ report package w/email sign up ]

Munis Well Bid But Underperform Treasuries
(INSIGHT: pub. August 10, 2010; 3:30p EST)
Municipal bonds traded with a firmer tone today as several large new-deals found strong investor support while secondary activity remained on the lighter side:

”Munis just seem really well bid right now,” a trader said. “There is not a lot of clean paper out there to go around. Today we saw the Minnesota"...continued [ report package w/email sign up ]

Steady To Firmer Ahead Of Portland
(INSIGHT: pub. August 10, 2010; 10:30a EST)
Municipal bonds showed hints of strength here and there while secondary activity is still limited but better than yesterday ahead of a large noon competitive loan:

”We see good flow this morning, especially inside of 10-years as we gear up to buy Portland, Oregon sewer revenue bonds at noon,” a trader said. “There are a few signs of"...continued [ report package w/email sign up ]

Quiet Session With Few Changes
(INSIGHT: pub. August 9, 2010; 3:30p EST)
Municipal bonds were lightly traded and generally little changed today as Phoenix began taking retail orders:

”The market is pretty quiet today and we see the scale as unchanged,” a trader said. “There were few bids-wanteds out there and things that we saw trade did"...continued [ report package w/email sign up ]

Munis Better With Taxables
(INSIGHT: pub. August 5, 2010; 11:30a EST)
Municipal bonds were firmer this morning in sympathy with the Treasury market after the July employment report:

”It was slow to get going but after the employment number things seem to be picking up across the curve, particularly around 7- or 8-years and out,” a trader said. “We are probably"...continued [ report package w/email sign up ]

Munis Improve Slightly 10-Years & Out
(INSIGHT: pub. August 4, 2010; 1:00p EST)
Municipal bonds posted minor gains outside of 10-years this afternoon as the primary market was at its busiest of the week:

”A lot of the new-issues are many times over and it feels like the re-investment money in munis is back into play,” a trader said. “There continues to be a bit of hang-up for"...continued [ report package w/email sign up ]

Firmer; TFA's See Tighter Spreads
(INSIGHT: pub. August 4, 2010; 10:30a EST)
Municipal bonds were lightly traded this morning but firmer again outside of 10-years while the remaining large deals of the week priced:

”It is quiet but things are starting to get going,” a trader said. “The initial trading looked firmer outside of some of the Minnesota balances. I think we should be able to"...continued [ report package w/email sign up ]


(INSIGHT: pub. August 3, 2010; 2:30p EST)
Municipal bonds traded with a firmer tone 10-years and out today as Treasury bonds rallied 10-years and in, meantime the new-issue market was full on both the negotiated and competitive fronts:

”We see the long-end slightly better but generally this market is lightly traded in the Street,” a trader said. “There were some accounts reaching"...continued [ report package w/email sign up ]

Waiting For Minnesota
(INSIGHT: pub. August 3, 2010; 10:30a EST)
Municipal bonds were little changed with a firmer tone in spots as taxables opened stronger; meantime most traders are waiting for Minnesota to come:

"Clearly the market is in a wait and see mode for the Minnesota deals,” a trader said. “Based on some of the price talk I’ve seen it looks like it will be"...continued [ report package w/email sign up ]

Few Changes To Start Month
(INSIGHT: pub. August 2, 2010; 3:30p EST)
Municipal bonds were little changed in a quiet trading session while the Treasury market sold-off, meantime the primary was headlined with the New York City Transitional Finance Authority today:

”I think a lot of this week will depend on how Minnesota fares tomorrow,” a trader said. “Today we didn’t see much of anything in terms of activity outside of the TFA deal, which as of right now it is unclear what"...continued [ report package w/email sign up ]

Quiet Open; TFA's In Market
(INSIGHT: pub. August 2, 2010; 10:30a EST)
Municipal bonds were lightly traded and little changed this morning ignoring a sell-off in Treasuries for now:

”It is just too quiet right here to see any real direction yet,” a trader said. “Taxables are off, but remember they"...continued [ report package w/email sign up ]

Investors bid up prices on the longest maturity part of the taxable Build America Bond deal, due in 2035, pushing down the risk premium to 325 basis points, or 3.25 percentage points, over the benchmark 30-year Treasury bond. Before the sale, the premium--the bonus investors demand to buy the bonds instead of extremely safe Treasurys--was forecast at 340 basis points, give or take 10 basis points. Citigroup was ... WSJ.com

Muni Yields at Record 9-Year Low May Drop Further, Fabian Says
(SPECIAL: pub. July 12, 2010;)
Yields on 10-year top-rated municipal bonds, which move inversely to price, may decline further after falling to the lowest level since 2001, according to Matt Fabian, managing director of Municipal Market Advisors.

Tax-exempt general obligations remained at an average yield of 2.94 percent for the second straight day on July 9, the lowest in at least nine-and-a-half years, as investors boosted their holdings with reinvested June and July coupon payments. States and municipalities are scheduled to sell $6.3 billion in debt this week, 17 percent below the weekly average this year, according to data compiled by Bloomberg.

“If people become comfortable below 3 percent, munis will have more of a rally potential,” Fabian said in an interview. “This could cause more trading accounts to want to come in and trade munis because there’s an identified upside. This could be the sign of a turning point in the market.” BondsOnline.com

Advisers' Use of Build America Bonds Grows
(SPECIAL: pub. July 9, 2010;)
Financial advisers are using more Build America Bonds in clients' portfolios, and their appetite is only expected to grow if the taxable-bond program is extended—even if federal subsidies are trimmed.

"Over the next couple of years, it's going to continually become a bigger playing field for the adviser," he says. "They're just getting started with these bonds."

Build America Bonds are municipal debt instruments authorized under the U.S. government's 2009 stimulus program. Unlike many municipal bonds, the income they generate is subject to tax, but the federal government subsidizes 35% of the interest cost of the bonds. As of July 6, almost $118 billion in bonds had been issued by states, cities and other entities, according to consulting firm Municipal Market Advisors. WSJ.com

Hospitals' Wall Street Wounds
(SPECIAL: pub. July 7, 2010;)
Hospitals nationwide are tangling with Wall Street to get out of disastrous wagers that have complicated their financial problems.

Some hospitals are paying millions of dollars in penalties to get out of derivatives contracts, after betting incorrectly that interest rates would rise. Other hospitals are paying higher interest rates. At many, these ill-fated financial bets have contributed to layoffs and scuttled projects.

More than 500 nonprofit hospitals—at least one in six—bought interest-rate "swaps" in a bid to lower their borrowing costs, estimates Municipal Market Advisors, a Concord, Mass., consulting firm. The swaps allowed hospitals ... WSJ.com

Fabian Sees Tax Overhaul, Not Cuts for State Budget Woes: Video
(SPECIAL: pub. July 1, 2010;)
Matt Fabian, managing director of Municipal Market Advisors, discusses the outlook for tax changes by states and local governments to reduce debt. Fabian talks with Betty Liu on Bloomberg Television's "In the Loop." (Source: Bloomberg) (Bloomberg) WashingtonPost.com

Munis Underperform Treasuries as Default Speculation Mounts
(SPECIAL: pub. June 30, 2010;)
Municipal bonds underperformed U.S. Treasuries in the first half as default speculation drove state and local government yields to the highest level relative to government bonds in 13 months.

Ten-year municipal bond yields rose to 100 percent of Treasuries for the first time since May 2009, from 80 percent six months ago, according to Municipal Market Advisors data. Investors bought Treasuries, pushing two-year yields to a record low this week, on signs of slowing global economic growth and amid protests in Europe over austerity measures. BondsOnline.com

City Symbolizes Budget Crisis Facing Many Across US
(SPECIAL: pub. June 29, 2010;)
State capital Harrisburg, population 50,000, is only the ninth-biggest city in Pennsylvania. Yet it has become a center of debate over the nation’s brewing municipal fiscal crisis.

And Wall Street bond traders are watching what happens in Harrisburg very closely, noting that the city is one of the more troubled bond issuers in a municipal market that figures $2.8 trillion in size, according to Municipal Market Advisors. CNBC.com

http://www.cnbc.com/id/38001354
(SPECIAL: pub. June 26, 2010;)
The drumbeat of anxiety over municipal bonds is getting louder, with headlines screaming about state budget deficits and talking heads—Warren Buffett among them—expressing alarm over the ability of issuers to make good on their debts.

There are many ways investors can sidepstep muni minefields. They can forego individual bonds and instead buy a municipal-bond fund, though these carry management fees and carry other risks. "The downside for funds is that most are managed to outperform each other from a total-return perspective," says Matt Fabian, managing director of consulting firm Municipal Market Advisors. If the bond market suffers a slump, fund investors may have to sell at a loss, while individual bondholders can simply wait to be paid out as the bonds mature, he says. WSJ.com

Midwest Munis Bet on Retirees -- and Lost
(SPECIAL: pub. June 16, 2010;)
When Erickson Retirement Communities filed for bankruptcy in October 2009, the senior housing and health-care operator joined a long list of businesses felled by the nationwide housing slump and subsequent recession. Erickson, a Baltimore-based operator of about 19 continuing care retirement communities with about 23,000 residents, was a casualty of the housing market as surely as any homeowner who lost a house to foreclosure.

Erickson will be paying bondholders about $3.5 million of the $95 million total debt associated with its Chicago-area Sedgebrook assisted living complex, according to Matt Fabian, managing director of Municipal Market Advisors, a research firm that tracks many of the estimated 60,000 municipal bonds on the market. His data show that there are 23 retirement facilities-related bond issues representing about $673 million worth of debt that have missed payments and defaulted. Another $1.4 billion of retirement bonds are either making payments from reserves or are in technical default, making the sector one of the shakiest in the still relatively sedate muni marketplace.

One of the Sedgebrook bonds defaulted in December, and now trades at 14 cents on the dollar, according to MMA data. The bonds are mostly owned by big mutual fund companies that put the unrated series, which paid 6%, into high-yield municipal bond funds. SmartMoney.com

In Florida, Housing Bust Looms Over Bonds
(SPECIAL: pub. June 9, 2010;)
The vacant lots and half-finished subdivisions that dot the landscape around Tampa and other Florida cities tell a larger story than a housing bubble that's popped.

The empty spaces and sparsely built streets are evidence of a messy financial residue that some experts say could represent the next wave of trouble for investors – the weakened state of municipal bonds. Munis, a $3 trillion corner of the market once thought to be almost risk-free, are seeing more defaults, and while the numbers for busted bonds remain small, they're growing, and so are investor fears.

"Everyone is concerned," says Matt Fabian, managing director of Municipal Market Advisors, a research firm that keeps track of most of the 60,000 muni bonds on the market, about one-third of which are rated by agencies such as Moody's, Fitch Ratings and Standard & Poor's. "There are lots of questions over whether a collapse will start." SmartMoney.com

Bonds: A refuge from May's market mayhem
(SPECIAL: pub. May 29, 2010;)
As many Americans shunned the stock market in favor of buying bonds in record amounts over the last year, financial writers including yours truly felt compelled to warn that bonds, too, carry risks.

But after the nightmare that stock investors just suffered through this month, most newbie bond owners probably figure they made exactly the right choice with their money.

Matt Fabian, senior analyst at research firm Municipal Market Advisors in Westport, Conn., says the muni market has benefited from a continuing influx of "people who are buying to hold, not trading accounts." LATimes.com

Volcker Rule, or Not
(SPECIAL: pub. May 25, 2010;)
WASHINGTON — As the two chambers of Congress begin to hammer out a single financial regulatory reform bill over the next several weeks, industry groups have mixed views about a provision in the Senate bill that would prohibit banks from engaging in proprietary trading but exclude municipal, Treasury and federal agency securities from the ban.

“If the Senate exempts munis, then it’s really not a matter of concern for the market,” said Matt Fabian, managing director at Municipal Market Advisors.

Dealers’ ability to at least temporarily buy munis from their prop desks has been important for managing the primary market, and a limitation on that ability would probably have led to slightly higher yields, he said.

At the same time, Fabian said extending the ban to municipals would avert a return to the risk that the market was carrying when proprietary TOB programs were using a lot of leverage to hold munis for incremental return. BondBuyer.com

Municipal Bonds: The Next Financial Land Mine?
(SPECIAL: pub. May 24, 2010;)
As Wall Street nervously watches the sovereign debt crisis unfold in Greece, another potential landmine is looming closer to home, one that could bring U.S. cities and towns to their knees, force the federal government to cough up another bailout package, and potentially send the unemployment rate much higher. The danger this time? Municipal debt.

Bankruptcy is a particularly unnerving prospect for bondholders. Municipal securities are a $2.8 trillion market, according to Municipal Market Advisors. An avalanche of investors sought refuge in the sector in recent years, lured by the stable, tax-free nature of muni bonds. More than $69 billion flowed into long-term municipal bond mutual funds in 2009, up from only $7.8 billion in 2008 and $10.9 billion in 2007, according to the Investment Company Institute. Another $15.2 billion has been added so far in 2010. Time.com

Washington to Sell $1.1 Billion at Lowest Build America Yields
(SPECIAL: pub. May 24, 2010;)
Washington State plans to sell $1.1 billion of Build America debt in the week’s biggest municipal bond sale after yields on the taxable securities reached the lowest level since their inception last year.

The average yield on the Wells Fargo Build America Bond index touched 5.63 percent May 21, near a record low of 5.62 percent on May 6. The index began tracking yields in August. Investors are buying U.S. government debt for its relative safety as speculation grows that European leaders may fail to contain the region’s fiscal crisis. Build Americas have helped boost the holdings of municipal notes by investors abroad.

“It’s been volatile everywhere except munis -- we’ve been the flight to safety,” said Matt Fabian, managing director of Municipal Market Advisors. “For munis to not sell off despite all the global concerns about risk and the specific constant drumbeat about pensions and budget issues” signals investor confidence in the market. BusinessWeek.com

Municipal Bond Risk Overstated - Interview with Tom Doe of Municipal Market Advisors
(SPECIAL: pub. May 10, 2010;)
In a recent interview, Tom Doe, the CEO of MMA provided his thoughts on the municipal bond market. This includes his belief that Jim Chanos and others are overblowing municipal bond default concerns. He also discusses the BAB market, the outlook for munis in May, and how Moody's and Fitch's rating recalibrations will impact the muni market BestCashCow.com

Buffett Says GM Rescue May Mean U.S. Can’t Say No to States
(SPECIAL: pub. May 5, 2010;)
Warren Buffett, chairman of Berkshire Hathaway Inc., said the U.S. would probably feel compelled to rescue a state facing default after the government committed $700 billion to bail out financial firms and automakers.

States have severe budget issues, but they are not close to being unable to pay their debt,” said Matt Fabian, managing director of Municipal Market Advisors, a Concord, Massachusetts- based researcher. “From an immediate bondholder perspective, there is really only a minimal risk of default,” he said. “Many of the more aggressive measures taken by states have been done specifically to protect bondholders.” BusinessWeek.com

Budget Cuts May Avert Any ‘Blip’ in Muni Bankruptcies (Update2)
(SPECIAL: pub. April 29, 2010;)
State and local governments are likely to avoid bankruptcy through spending cuts, even as their financial stress mounts, according to panelists at a Securities Industry and Financial Markets Association seminar.

About 187 municipal issues have missed payments to bondholders since last year, said Matt Fabian, managing director of Municipal Market Advisors, a Concord, Massachusetts-based researcher. A total of 495 issuers have filed notice of some type of impairment, such as payment default, reserve draws or other developments, he said

The nonperforming debts are concentrated in certain parts of the municipal market, Fabian said. Among these he listed so- called dirt bonds in Florida that were backed by real estate projects that collapsed in the recession, and hospital bonds. BusinessWeek.com

Illinois Markets $250 Million Tax-Exempts After Fitch Downgrade
(SPECIAL: pub. April 1, 2010;)
“Even though Illinois has its issues, there are plenty of buyers,” said Matt Fabian, a senior analyst with Municipal Market Advisors in Westport, Connecticut. The yield won’t be affected because “there’s such a shortage of tax-exempt, long- maturity paper that I think they’ll do fine.” BusinessWeek.com

No shortage of credit here
(SPECIAL: pub. April, 2010;)
Some industry sources predict that Build America Bonds could reach $100 billion to $150 billion this year—or close to 30 percent of all municipal bonds. The BAB program is also keeping a lid on rates for traditional tax-exempt municipal bonds because it is providing an attractively priced alternative for both buyers and sellers of municipal bonds. Matt Fabian, managing director of Municipal Market Advisers (MMA), a bond market research firm, said, “I think it’s pretty clear that [BABs] have been replacing, on almost a dollar-for-dollar basis, funds that would have been sold tax exempt. So they are contributing to a scarcity situation” for tax-exempt bonds. If that’s the case, the BAB program hasn’t necessarily expanded the municipal bond market as funds flow from one muni bond type to another. MinneapolisFed.org

US Investors Not Keen On Greece; See California As Safer Bet
(SPECIAL: pub. March 31, 2010;)
"California is a deficit problem, Greece is a debt problem," said Matt Fabian, senior municipal analyst at Municipal Market Advisors. "Greece needs current market access in order not to default on their debt. In California, all the debt is fully funded and debt service is well below 10% of the state's expenses." Nasdaq.com

State Debt Woes Grow Too Big to Camouflage
(SPECIAL: pub. March 29, 2010;)
Even though about $5 billion of municipal bonds are in default today, the vast majority were issued by small local authorities in boom-and-bust locations like Florida, said Matt Fabian, managing director of Municipal Market Advisors, an independent consulting firm. The issuers raised money to pay for projects like sewer connections and new roads in subdivisions that collapsed in the subprime mortgage disaster. NYTimes.com

Ambac Regulator Takes Over to Avoid Asset ‘Scramble’
(SPECIAL: pub. March 26, 2010;)
Dilweg’s decision to halt payments on mortgage securities isn’t necessarily a positive for municipal-bond holders, according to Matt Fabian, a senior analyst with Municipal Market Advisors in Westport, Connecticut. “It gives an investor pause -- is my bond the next one for which the company doesn’t pay on its policy?” Fabian said. BusinessWeek.com

Depfa Demands Money
(SPECIAL: pub. March 25, 2010;)
“It’s a unique transaction but as an investor you have to be very careful in buying the debt of any issuer that walks away from a moral obligation pledge,” said Matt Fabian, a managing director at Municipal Market Advisors. “The moral obligation is a time honored tradition.” BondBuyer.com

Interest-Rate Deals Sting Cities, States
(SPECIAL: pub. March 22, 2010;)
The supply of municipal derivatives swelled to more than $500 billion before falling in the past two years, estimates Matt Fabian, managing director at research firm Municipal Market Advisors. Moody's Investors Service says the surge was fueled by Wall Street marketing efforts, demand from state and local governments and "relatively permissive" statutes on the use of swaps in Pennsylvania and Tennessee, both of which are taking steps to tighten rules. WSJ.com

California muni bond market could see supply and demand shift under Obama proposals
(SPECIAL: pub. February 2, 2010;)
Obama proposes to make the BAB program permanent and to allow more muni issuers to make use of the financing. But he also wants to reduce the federal interest subsidy on BABs to 28% from 35%, beginning with bonds sold in 2011. Depending on market interest rates for tax-free bonds, that could tilt some muni issuers away from BABs and back toward tax-free financing for their projects. Matt Fabian, senior analyst at Municipal Market Advisors, said he believed that the subsidy cut was minor and that for many muni issuers, “there will still be a compelling argument for using BABs.” LATimes.com

N.J. budget disputes, surprise announcements may lessen investor confidence
(SPECIAL: pub. January 28, 2010;)
States usually try to avoid releasing major financial news during or close to a bond sale, said Matt Fabian, managing director of Municipal Market Advisors in Concord, Mass. That way, investors know they get what they paid for.

"You could be annoyed at if you’d just bought $100 million of those bonds, because it implies that maybe you paid the wrong price," he said. NJ.com

Cantor Fitzgerald to Enter Municipal Bond Market
(SPECIAL: pub. January 26, 2010;)
Matt Fabian, a senior analyst and managing director at Municipal Market Advisors, a Concord, Massachusetts-based research firm, said opportunities are opening up in investment banking following the demise of bond insurers such as MBIA Inc. and Ambac Financial Group Inc.

Without bond insurance, which allowed municipalities to get AAA ratings on their bonds and cheaper borrowing, municipal debt now takes more time to sell and traders can take advantage of greater volatility, Fabian said.

In addition, with the federal government facing a deficit of $1.35 trillion and state governments facing deficits of $350 billion during the next two years, demand for tax-exempt bonds will rise, Fabian said.

“More investors want access to tax-exempts with the tax hikes coming,” he said. BusinessWeek.com

MUNI WATCH: Burned Once, Issuers Shun New Variable-Rate Debt
(SPECIAL: pub. January 20, 2010;)
Matt Fabian of Municipal Market Advisors estimates municipalities have paid as much as $28 billion to exit interest-rate swaps on variable-rate debt over the past two years, and that's not including advisory fees, legal fees and commissions on new debt issuance. WSJ.com

Record Year for Muni Bond Sales Seen as N.Y. MTA Preps Offering
(SPECIAL: pub. January 6, 2010;)
The “generous” 35 percent Treasury rebate on Build America interest costs may entice state and local borrowers to sell as much as $150 billion of the bonds in 2010, more than twice as much as last year, Municipal Market Advisors forecast this week. The MTA, operator of subways, buses, rail lines and river crossings, plans to sell $350 million of so-called BABs as soon as today.

“Because of the generous BAB subsidy, we are forecasting record municipal borrowing” this year, Matt Fabian, senior analyst at the Concord, Massachusetts-based research firm, said in a Jan. 4 report. “Many of the uncertainties in the municipal market for 2010 involve questions of how long the BAB program is extended and at what terms. Re-authorization for at least another two years is a near-certainty.” BusinessWeek.com

States pitch bonds to foreign buyers
(SPECIAL: pub. December 24, 2009;)
Matt Fabian is with Municipal Market Advisors. He estimates foreign investors have bought about 40 percent of Build America Bonds. He says they pay slightly higher interest than comparable corporate bonds with a little extra security.

MATT FABIAN: So triple-A Utah. Very low risk of payment default. It's hard to find something quite that safe in the corporate market. Especially now, with conditions still so uncertain. PublicRadio.org

N.J. Leads Municipal Bond Downgrades as Aid Shrinks
(SPECIAL: pub. December 22, 2009;)
“This has been issue number one for local governments in the past 12 months,” said Matt Fabian, 39, managing director and senior analyst at Concord, Massachusetts-based research firm Municipal Market Advisors. “They’re feeling the pressure.” Bloomberg.com

Muni Bond Madness
(SPECIAL: pub. November 30, 2009;)
Build America Bonds have accounted for a quarter of new muni issues this year. In 2010 their share is likely to hit 40% of the $400 billion new issue market, predicts Thomas Doe, founder of Municipal Market Advisors. Forbes.com

Puerto Rico Bonds Beat U.S. States as Fortuno Cuts
(SPECIAL: pub. November 13, 2009;)
Fortuno’s so-called fiscal stabilization plan will have to show results soon to sustain the gains investors have recorded, said Matt Fabian, managing director at Municipal Market Advisors, a researcher in Concord, Massachusetts.

“You have a major implementation risk involving how well the plan will do,” Fabian said in an interview. “It’s not a credit that’s out of the woods yet.” Bloomberg.com

California May Pay More Than in March at $1.5 Billion Bond Sale
(SPECIAL: pub. November 10, 2009;)
Borrowing costs for state and local governments that pay so-called spreads above benchmark tax-exempt yields reached a two-month high as California state-level debt issuers borrowed or refinanced more than $10.5 billion since Oct. 5.

"With California flooding the new issue market with higher-yielding paper, spread paper is cheapening to stay competitive,” Matt Fabian, managing director and senior analyst at Concord, Massachusetts-based independent research firm Municipal Market Advisors, said in a report yesterday. Bloomberg.com

Bond Debacle Sinks Jefferson County
(SPECIAL: pub. November 8, 2009;)
"At some point they will be able to get market access back," says Matt Fabian, a managing director at Municipal Market Advisors in Concord, Mass. "But it's just going to be much more expensive for them. Jefferson County is the scariest situation in the market today." ?

Fabian worries that Jefferson County's method of solving its problem could set a precedent for other bond issuers. While investors are prepared to risk default on riskier bonds, such as land speculation district bonds in Florida that default frequently, Jefferson County's sewer bonds are considered to be "safe sector credits" that yield a steady and supposedly worry-free return. Should Jefferson County declare bankruptcy or make an arrangement where bondholders get cents on the dollar, analysts fret that other municipalities facing similar problems—though likely on a lesser scale—would follow suit and either declare bankruptcy or make arrangements with creditors that would yield skimpy payments. "How Jefferson County got into its situation is unique," says Fabian. "But how it gets out could set an example for other issuers to follow, and that's the fear for investors." BusinessWeek.com

California Boosts Build America Bond Sale 21% to $908 Million
(SPECIAL: pub. November 3, 2009;)
“It’s a good sign of investor demand generally for the state,” said Matt Fabian, senior analyst and managing director for Concord, Massachusetts-based independent research firm Municipal Market Advisors. “Despite all of its credit and supply issues, there’s at least one buyer” with a “sizeable” appetite for its bonds, he said. Bloomberg.com

Harvard’s Bet on Interest Rate Rise Cost $500 Million to Exit
(SPECIAL: pub. October 17, 2009;)
Harvard paid “a large termination fee, but within the range that we’ve heard about over the last year,” Matt Fabian, the senior analyst and managing director of Municipal Market Advisors in Westport, Connecticut, said in an e-mail. “There is a reason why, regardless of the issuer’s sophistication, there should be limits to their exposure to derivatives and variable rate bonds.” Bloomberg.com

Washington to Refinance Less as Muni Yields Jump to 7-Week High
(SPECIAL: pub. October 14, 2009;)
“The market has been slowing down, price gains have slowed down and trading volumes are getting thinner and thinner,” said Matt Fabian, the senior analyst and managing director of Municipal Market Advisors in Westport, Connecticut. Bloomberg.com

California municipal bond sale falls short of fundraising goal
(SPECIAL: pub. October 9, 2009;)
After $4.5 billion in general obligation bonds fails to attract enough orders to raise the full amount, the state cut the total size of the deal by 8% to $4.14 billion, Treasurer Bill Lockyer says.

Suddenly, "people are punting bonds," said Matt Fabian, senior analyst Municipal Market Advisors in Westport, Conn. With investors insisting on higher yields on bonds in general before they'd buy, California was bound to be squeezed, analysts said. That also gave some investors an excuse to focus on the state's still-troubled fiscal situation. LA Times

Foreign Buyers Added Most to Munis as Build America Deals Began
(SPECIAL: pub. September 17, 2009;)
Foreign buyers boosted holdings of U.S. municipal securities by a larger percentage than any other investor group in the second quarter as issuers started selling taxable Build America Bonds, offering yields higher than tax- exempt debt.

Holdings of long-term municipal securities in “the rest of the world” rose $5.6 billion, or 14 percent, to $45.6 billion during the April-through-June period, the highest in a year, according to Federal Reserve data released today.

“That has to be BABs,” Matt Fabian, managing director of independent research firm Municipal Market Advisors said in an interview from Westport, Connecticut. Bloomberg.com

State revenue anticipation notes to yield less
(SPECIAL: pub. September 17, 2009;)
Early next week, California will sell $8.8 billion in tax-exempt revenue anticipation notes, but investors hoping for a repeat of last year's juicy yields - 3.75 and 4.25 percent - are likely to be disappointed.

On one hand, with the average tax-free money market fund yielding less than 0.1 percent, funds "are absolutely starved" for yield, says Matt Fabian, managing director with Municipal Market Advisors, a research firm. San Francisco Chronicle

Municipal Credit Spreads Narrow to Tightest Since October 2008
(SPECIAL: pub. September 4, 2009;)
Yields on general obligation bonds due in 20 years tracked by the weekly Bond Buyer 20 index dropped 16 basis points this week to 4.37 percent yesterday, the lowest since February 2008. Municipal Market Advisors’ daily gauges of AAA debt were little changed today.

Fixed-rate municipal borrowing fell to about $2.8 billion before the Labor Day holiday weekend, the lowest since the week that ended July 4, Independence Day, Bloomberg data show. Bloomberg

Bonds: Is Now the Time to Buy Long-Term Munis?
(SPECIAL: pub. August 26, 2009;)
Yields on tax-exempt bonds maturing in less than 10 years fell to a six-year low during the week of Aug. 16. With 30-year municipal bonds offering yields near 5%—an astonishing four percentage points higher than two-year muni bonds—yield-hungry municipal bond investors are shifting money into riskier, longer-term municipal bonds, according to Municipal Market Advisors, which publishes a newsletter for municipal bond investors. Business Week

A 'win-win' deal for Stamford
(SPECIAL: pub. August 25, 2009;)
With the sea change in the municipal market, Fabian (from Municipal Market Advisors) said the city is lucky that the project has found a way to move forward without issuing bonds.

"The municipal market may never return where we are doing projects like this," he said. Moreover, many TIF districts that have issued bonds have gone into default. "The investors are not there, but the ones who are there are much more conscious because of the defaults across the country," he said. Greenwich Time

Local difficulties
(SPECIAL: pub. August 24, 2009;)
Matt Fabian, managing director of Municipal Market Advisors, a Massachusetts research firm, puts it bluntly: "The municipal bond industry is the backwater of the financial markets because it was designed that way."

Although with $2,700bn (£1,640bn, €1,880bn) of bonds outstanding it had become a decidedly big backwater, for years the market where US state and local governments raise money for everything from roads and sewers to schools and sports stadiums operated with hardly a hitch. Default rates were low, many prices barely moved and bonds of some of the 50,000 issuers did not trade at all. Financial Times

Hunger for yield could help California in looming debt sale
(SPECIAL: pub. August 11, 2009;)
The rally in California munis has been so strong that some analysts say yields now are too low on shorter-term bonds to warrant locking up money. "The value is out of California debt," said Thomas Doe, head of market research firm Municipal Market Advisors in Concord, Mass.

But yield-hungry investors should soon have another option from the state: a debt offering that will bridge the gap between near-term spending needs and future tax revenue. Los Angeles Times

Muni bonds lose ratings after Ambac junked
(SPECIAL: pub. July 31, 2009;)
Thousands of municipal bonds have lost their ratings and others have been downgraded after Standard & Poor’s this week stripped bond insurer Ambac Assurance of its investment-grade ratings.

“It is not a catalyst for a major market shift, but it will reduce the valuation and the liquidity which will spook retail investors,” said Matt Fabian, managing director at Municipal Market Advisors. Wealthy US individuals are big holders of muni bonds because the interest income is exempt from some taxes. Financial Times

Bond analyst skeptical of California's new budget
(SPECIAL: pub. July 28, 2009;)
A bond analyst was skeptical Monday about California's revised budget, saying it was filled with accounting tricks that would do little to improve the state's poor credit rating.

In addition, lenders may not be satisfied with California's latest spending plan, which combines $15 billion in cuts to education, prisons, parks and other aspects of state government with accounting maneuvers and borrowing to close a $26 billion deficit.

The state already has the lowest credit rating in the nation, except for the commonwealth of Puerto Rico, said Matt Fabian, a bond analyst at Municipal Market Advisors, based in Concord, Mass. The Associated Press

Taxpayers Inferior to Shareholders With Obama Bonds
(SPECIAL: pub. July 22, 2009;)
State and local governments, forced to close budget gaps by firing workers and shutting schools, may pay at least $4.2 billion more in interest than companies with similar credit ratings on Barack Obama’s Build America Bonds.

Congress’s Joint Tax Committee estimated in February that the Treasury would spend $9.8 billion through 2019 subsidizing the bonds. Matt Fabian, a managing director at Municipal Market Advisors in Westport, Connecticut, said in a June 22 report that the program’s price tag may reach $27.3 billion by the time all such securities mature in 2044. Bloombeg.com

Build America Bonds Boom, Adding to Tab
(SPECIAL: pub. July 18, 2009;)
Washington's effort to jump-start the once-stagnant market for municipal debt has produced a program that continues to swallow new deals.

Led by a $352 million sale from the North Carolina Turnpike Authority, the Build America Bonds program generated $1.72 billion of new issuance this past week, comprising nearly a quarter of municipal sales. That is the highest total in three months, and four times the prior week's pace. The initiative, part of the $787 billion federal stimulus package signed in February, gives state and local issuers a 35% rebate on interest payments for new debt. Wall Street Journal

Municipal bonds: Safety depends on the municipality
(SPECIAL: pub. July 14, 2009;)
If you're concerned with safety, you want to stick with what are called general obligation bonds. These are bonds that draw on the borrowers' general taxing power. There have been almost no defaults of general obligation bonds in the past 30 years, says Matt Fabian of Municipal Market Advisors. USA Today

Fiscal crisis takes toll on California's bond ratings
(SPECIAL: pub. July 12, 2009;)

“California's issue is really a political crisis,” said Matt Fabian, managing director of Municipal Market Advisors, a bond analysis and research firm in Massachusetts. “The state has the financial ability to patch up its own budget. But it can't overcome the political problems: the polarization of the Legislature, the acrimonious political atmosphere and the requirement of a two-thirds majority to pass taxes or pass the budget.” San Diego Union Tribune

California's Broke. Should You Invest in It?
(SPECIAL: pub. July 5, 2009;)
Time for some California dreaming: Will the state plug its budget gap, and are its bonds worth a gamble?

Yes, according to Matt Fabian, managing director of Municipal Market Advisors in Concord, Mass. As California hurtled toward its budget deadlines last month, interest rates on its tax-free bonds jumped. Residents can get yields north of 5 percent on intermediate-term general obligation bonds and 6.2 percent on long-term bonds. Nonresidents can buy into the bonds through many national municipal funds, which buy the bonds of many states. The Washington Post

Muni bond downgrades add risk - but potential for higher returns, too
(SPECIAL: pub. July 2, 2009;)
Time for some California dreaming: Will the state plug its budget gap, and are its bonds worth a gamble?

Matt Fabian, of Municipal Market Advisors in Concord, says yes. Interest rates on California’s tax-free bonds have jumped. Residents can get yields of 6.2 percent on long-term bonds. Nonresidents will find the bonds in many national municipal funds. Boston Globe

Wall Street awaits California's short-term borrowing plans
(SPECIAL: pub. July 2, 2009;)
Once California produces a fiscal 2010 budget more or less in balance, Wall Street has been expecting that the state would come looking for short-term financing to bridge the gap between current cash needs and future tax revenue.

Normally, this kind of borrowing -- via so-called revenue anticipation notes, or RANs -- is no big deal. Investors usually are eager to fund the notes because they mature in 12 months or less, and the interest paid is exempt from state and federal income tax. Los Angeles Times

Muni Downgrades Add Risk, Prize to Bond Game: Jane Bryant Quinn
(SPECIAL: pub. July 1, 2009;)
Time for some California dreaming: Will the state plug its budget gap, and are its bonds worth a gamble?

Matt Fabian, managing director of Municipal Market Advisors in Concord, Massachusetts, says yes. As California hurtles toward its budget deadlines this month, interest rates on its tax-free bonds have jumped. Residents can get yields north of 5 percent on intermediate-term general obligation bonds and 6.2 percent on long-term bonds. Nonresidents will find them in many national municipal funds, which buy the bonds of many states. Bloomberg.com

Twins Add $4 Million to Debt Account After Interest-Rate Hikes
(SPECIAL: pub. June 29, 2009;)
The Minnesota Twins transferred $4 million to a debt-service fund for their new stadium after high interest rates caused by 2008’s credit-market turmoil drained an account devoted to paying off the bonds. Bloomberg.com

World Bank to Green Shoots: Not So Fast
(SPECIAL: pub. June 22, 2009;)
By Jon Nadler Bullion values eroded swiftly as the market commenced trading on Monday .... according to Municipal Market Advisors in Concord, Massachusetts. ... International Business Times

Is This a Better Bond?
(SPECIAL: pub. June 22, 2009;)
But Build America bonds are municipal bonds with a twist—their yields are not ... says Matt Fabian, managing director of Municipal Market Advisors, ... Smartmoney.com

Bernanke Must Reassure 'Confused' Market About Rate Strategy
(SPECIAL: pub. June 22, 2009;)
Yields on AAA-rated, 10-year general-obligation municipal bonds rose to 3.49 percent ... according to Municipal Market Advisors in Concord, Massachusetts. ... Bloomberg

Muni bond regulator seeks disclosure by banks
(SPECIAL: pub. June 22, 2009;)
The move is the latest effort by the Municipal Securities Rulemaking Board, ... of Municipal Market Advisors, said the proposed amendment is a good one. ... Bismarck Tribune

Which State Is Next For Bailout
(SPECIAL: pub. May 26, 2009;)
Matt Fabian of MMA Research on states asking for government funding if California receives a bailout. Fox Business News

Small Town, Big Debt
(NEWS: pub. April 8, 2009;)
Municipal bonds are traditionally safe investments, but cities and counties across Tennessee got in financial trouble because they entered the complex world of derivatives. NYT- Thomas Doe

NEW MUNI LEGISLATION IN THE WORKS
(SPECIAL: pub. March 12, 2009;)
In Washington, D.C. it is becoming increasingly likely that the House Financial Services Committee will release legislation impacting the municipal bond market. The legislation is apt to touch on:

• A Federal Guaranty of general obligation bonds at a low cost;
• Reinsurance of the monolines; and
• A backstop of banks providing letters of credits for tax-exempt variable-rate demand obligations.

This legislation could come out as soon as Friday but timing remains uncertain. Policy makers have only said that legislation is “in an advanced stage” and that the Chairman of the committee “signed off on all 3 major components.”

We stress that any proposed legislation is just that. MMA has noted an increasing chorus of policy makers and participants discussing these topics in the past few weeks. We will discuss market impacts in the 12:30 pm Insight today. [ report w/email sign up ]

Sports stadiums face economic fault line
(NEWS: pub. February 9, 2009;)
Everyone, including bond investors, are reading the same headlines," said Tom Doe, whose Concord, Mass.-based Municipal Market Advisors offers consulting services to municipalities. "They see the Yankees spending $400 million on three players, and then wonder, given the economy, are they going to fill all those seats, will anyone pay for the luxury suites and will there still be a naming rights deal." LA Times

Federal debt-purchasing program may exclude states
(NEWS: pub. Ocotober 9, 2008;)
The Fed also might be worried that if it began to lend money to California and other high-profile states, it could set a precedent for bailing out all 64,000 issuers of municipal debt, said Matt Fabian, a principal at Municipal Market Advisors, an independent research and consulting firm in Concord, Mass.

"It sets up a potentially unsustainable demand from other issuers," Fabian said. LA Times

Under Strain, Cities Are Cutting Back Projects
(SPECIAL: pub. September 30, 2008;)
By MARY WILLIAMS WALSH
Local governments have been effectively shut out of the bond markets, raising the cost of operations and threatening larger projects. [ click to NYT ]

Muni Money-Fund Yields Surge
(SPECIAL: pub. September 27, 2008;)
Wall Street Journal - USA
That ratio is "about as high as it's ever been," says Matt Fabian, senior municipal analyst at Municipal Market Advisors. Also propelling muni-fund yields ... [ click to WSJ ]

US Public Finance Market Hit Hard by Capital Freeze
(SPECIAL: pub. September 25, 2008;)
September 25, 2008, By Nicole Bullock in New York
...have a school that is open - that makes a freeze in the muni-market significant," said Thomas Doe, CEO of Municipal Market Advisors (MMA). "If you can't get access to the capital markets, you may have to raise taxes to generate the... [ click to FT ]

Money Market Crisis
(SPECIAL: pub. September 25, 2008;)
Managing Director at Municipal Market Advisors discusses how new money infrastructure volumes are down despite market expansion. Also; effects of the banking crisis on muni markets, the role of individual investors, and new legislation aimed at increasing underwriter participation. DerivActiv (mp3)

The municipal market faces a wide range of risks
(OUTLOOK: pub. September 15, 2008; 9:00a EST)
Like the rest of the global financial system, the municipal market faces a wide range of risks in recent developments, in particular if the knock on effects of Lehman’s bankruptcy, Merrill Lynch’s sale, and AIG’s restructuring begin invasive and widespread credit and confidence trauma. More locally, the reduction of these firms in our industry will reasonably restrict both primary and secondary market liquidity; current holders may have difficulty exiting positions without large price concessions, and issuers may be forced to wait some months before accessing the capital markets. There is also risk that secondary selling or investor redemptions, coming amid a strong flight-to-safety in Treasuries, will exacerbate underperformance and force more bonds into an unfriendly market. However, this is not the end of the muni market; we expect support at or behind current levels from the individual investors who have been, to date, driving muni demand.

”Muni credit may ultimately be strained by the current crisis as issuers’ capital market access is further diminished, infrastructure projects are postponed, and tax revenues cut [ report w/email sign up ]

FSA’S and Assured’s Warnings
(SPECIAL: pub. July 22, 2008;)
Last night, Moody’s issued a downgrade warning on FSA’s and Assured Guaranty’s financial guaranty ratings. While the market had begun to express some caution regarding FSA, the risk to Assured is a surprise. In its reports, Moody’s notes FSA’s exposure to directly-insured residential mortgage backed securities and Assured’s relatively concentrated portfolio, while both companies face very difficult new structured finance business generation (insured US structured paper issuance is down 97% YTD).

The report also alludes to a potential drop in municipal investor demand once Moody’s public finance group shifts municipal bond ratings to the global (corporate equivalent) scale. Finally, we believe Moody’s is also attempting to shore up the value investors’ place in Aaa ratings generally (we have heard repeatedly from investors that “Aaa” is no longer the indicator it once was). [ report w/email sign up ]

Tom Doe: Prop. & Casualty Industry Slowdown Will Bring Muni Supply; Panic of 1837
(SPECIAL: pub. July 8, 2008;)
Tom Doe, CEO of Municipal Market Advisors speaks on the property and casualty insurance industry and its possible reduced need for tax-exempt income. Also: primary volume trends, the month of July in historical perspective, and the similarities of today with the Panic of 1837. DerivActiv.com MP3

Matt Fabian: Using the MMA Consensus as a "Behavioral Overlay" to the MMD
(SPECIAL: pub. May 28, 2008;)
Matt Fabian, Managing Director at Municipal Market Advisors says the MMA Consensus is a “powerful and predictive” market indicator. Also: the BMA swap on the rise as a hedging vehicle, Moody’s credibility concerns, and the lessening value of bond insurer ratings. DerivActiv.com MP3

MMA Muni CDS (MCDX) NEW REPORT
(SPECIAL: pub. May 6, 2008;)
CREDIT DEFAULT SWAPS. Today, Markit launched MCDX, a new index of seven or more dealers’ daily evaluations of 50 uninsured, investment grade municipal credit default swaps (CDS). Accounts are able to take long or short positions on the index, reasonably correlating to their respective views on generic muni credit and rates. In general, our initial opinion is favorable—CDS should lead to stronger demand for muni bonds and more consistent credit risk pricing. But there are notable risks as well, including amplified counterparty exposure and cash market pricing volatility.
[ report w/email sign up ]

MMA"s Response To Moody’s Proposal For Global Scale Ratings For All Issuers
(SPECIAL: pub. Apil 14, 2008;)
Municipal Market Advisors generally supports Moody’s proposal to provide Global Scale Ratings (GSRs) for all municipal issuers, regardless of tax status. However, we believe the following improvements are essential to more permanently resolve the problems the municipal scale has created for issuers, investors, and regulators. These improvements are:... [ report w/email sign up ]

Supreme Court Muni-Bond Delay Has Lawyers, Markets Puzzling
(SPECIAL: pub. April 9, 2008;)
(Bloomberg) -- ''The length of time to me means that there could be more subtlety to the decision, or that the decision itself might not be as cut-and-dried as we had expected,'' said Matt Fabian, managing director at Municipal Market Advisors, a Concord, Massachusetts-based research firm.... [ click to Bloomberg.com ]

MMA Special Coverage: Congress Critical But Will Allow Industry To Self-Regulate For Time Being
(SPECIAL: pub. March 13, 2008;)
The hearing was colorful, Several members — notably chairman Barney Frank (D-Mass.), Rep. Michael Capuano (D-Mass) and Rep. Emanuel Cleaver (D-Mo.), the latter two are former mayors — took the opportunity to blast state treasurers on the panel , the bond insurance industry and the rating agencies for letting the market be “held captive” by a dual-rating standard. Frank opened the hearing in Biblical fashion telling the audience: “Let my people go,” referring to local and state governments... [ report w/email sign up ]

Munis: The new power portfolio
(SPECIAL: pub. February 12, 2008;)
(Money Magazine) -- If there's a lesson to be learned from the stock market's recent slide - triggered by massive losses on exotic and risky mortgage-backed securities - it's that there's nothing wrong with simple, boring investments. Like girders supporting a bridge, plain-vanilla bonds can help buttress a portfolio in a shaky market such as this.

But in January, high-quality five-year munis - those rated triple A by agencies like Standard & Poor's or Moody's - were paying out 2.80% on average, according to Municipal Market |ADVISORS. That was notably higher than the 2.53% yields of five-year Treasuries. Yes, rates are still modest in absolute terms. But "it's been very rare that you can buy a true triple-A-rated muni bond at 100% of Treasuries," says George Strickland, managing director of Thornburg Investment Management. [ click to Money.com ]

Next phase of credit crunch, the monoline meltdown
(SPECIAL: pub. February 8, 2008;)
MARK COLVIN: The global credit crunch is entering a dangerous new phase. In the United States, big bond insurers are facing huge losses. They're the companies that insured the debt of defaulting subprime mortgages. Many of them are now facing ratings downgrades and potential collapse. That's a major worry because if the bond insurers fail, it will create a vicious cycle as their investment bank customers are left holding the can. Some experts say the banks could suffer an extra $US 100-billion in losses and write-downs, causing a fresh round of turmoil on credit markets and stockmarkets. [ click to ABC.NET.AU ]

Do Bond Insurers Need CPR? Fears of a muni market meltdown may be overblown
(SPECIAL: pub. February 8, 2008;)
"By and large, the decision is made by the investor." Adds Matt Fabian, managing director of research firm Municipal Market Advisors: "It's not about credit quality. It's just a bureaucratic cost municipal issuers have to pay." [ click to BusinessWeek.com ]

Davis V. Kentucky - Decision
MMA is expecting a Supreme Court Decision on the Davis v. Kentucky case in the next few weeks; the likely outcome will affirm states’ ability to tax in- and out-of-state bonds differently and shore up the muni market status quo.

Next Big Crisis Could Involve Bond Insurers
(SPECIAL: pub. January 31, 2008)
There are $2.6 trillion worth of municipal bonds outstanding in America, with New York State holding about 7.5%, or roughly $200 billion, according to research firm Municipal Market Advisors. click to NY Sun

In the absence of a credible bailout...
(SPECIAL: pub. January 31, 2008)
"In the absence of a credible bailout plan, I think investors and issuers need to assume that MBIA, along with all of the other companies, will face continuing, worsening downgrade pressure all year,'' Matt Fabian, a managing director at Concord, Massachusetts-based consulting firm Municipal Market Advisors, said in a telephone interview. click to Bloomberg.com

Downgrades aplenty
(SPECIAL: pub. January 25, 2008)
"[The insurers] have a real lot of exposure to subprime credit cards and auto loans, for example. As those asset classes don't perform as well, even if you see a fraction of the damage you have seen in sub-prime housing, it is going to cause the ratings agencies to increase the requirements again."... click to BusinessSpectator.com

Corporate Ratings for Municipals?
Most municipal bonds are rated on a different, more conservative rating scale than corporate bonds. Triple-A US corporate bonds have up to 10x the historical default rate of single-A munis (Fig. 1). Neither municipal issuers, nor the individual investors who own the large majority of outstanding paper or fund shares, understand this point. As a result of the “muni rating scale,” taxpayers likely pay a large premium to access the capital markets (via insurance and rating fees and higher interest rates). We recommend that state and local issuers, or their federal regulators, consider requiring rating scale equivalency either directly or by policy alternative. [ report w/email sign up ]

2008 Brings Uncertainty and Also Opportunity
There are substantial uncertainties in municipals, but market-level risks one way or the other do not appear large. Last week, yields rallied across the curve with economic and corporate data raising fears of recession, and with an apparently solid January reinvestment bid putting away a fairly thin supply of paper. This was, once again, a difficult week for hedged or arbitrage-oriented investors as tax-exempts underperformed Treasury strength, and muni relative value indicators were pressed almost uniformly cheaper.

While we continue to recommend holding back some liquidity allocation to take advantage of any negative repricing, near-term prospects for such appear limited. Thus, with credit and maturity spreads returning, there is some yield opportunity for buy-and-hold investors willing to extend out along the curve. Total return investors are better positioned 5-10yrs [ report w/email sign up ]

NYT: These Bonds May Shine (Despite Your Tax Bracket)
Hedge funds with large leveraged positions in municipal bonds contributed to the situation. These hedge funds had shorted Treasuries to hedge against their muni bets, explained Thomas Doe, founder and chief executive of Municipal Market Advisors. As Treasuries began to rise, the hedge funds had to sell munis to cover their exposed shorts in Treasuries. “Last August was the first time rates went down and muni yields rose,” Mr. Doe said. “That’s because leveraged investors had to sell their munis.” click to NYT site

CNBC: Matt Fabian discussing municipals with Ron Fielding from the Rochester Oppenheimer Funds.
Trouble in the debt markets also took a bite out of municipal bonds in August. Matt Fabian Municipal Market Advisors sr. analyst, and Ron Fielding, OppenheimerFunds portfolio manager, discuss the cause of the bust and where the recovery begins. click to CNBC video

theStreet.com - Mortgage Crisis and Muni Bond Funds
Earlier this year, before the tender-option-bond programs started backfiring, investors using this strategy accounted for about 8% of the $2.4 trillion market, according to Municipal Market Advisors, an independent research and strategy firm. click to theStreet.com story