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Christie plan to give lottery to pension fund just a distraction

The pension fund would get the same $1 billion from the lottery or state budget. But for accounting purposes, the money counts more if it is being produced by an asset of the pension fund. So – presto chango! – the state’s unfunded liability would drop by $13.5 billion, says the Treasury Department.

Tim Holler
Fidelity Investments

Retirees, minimize your costs when buying bonds

But small investors can incur hefty trading costs even in higher-quality, less-obscure bonds. Research firm Municipal Market Analytics offers this example: Looking at a California general-obligation bond maturing in 2037, there were two inter-dealer trades on the morning of March 17 at nearly the same price: $112.73 and $112.67. Three minutes later, a customer bought $50,000 worth of the bonds at $115.10—2.2% more. Less than an hour after that, a large investor buying $6.9 million worth of the bonds got something much closer to the inter-dealer price: $112.99.

Tim Holler
Chicago Sun Times

Chicago Public Schools borrow $275 million at sky-high interest rate

Matt Fabian, a partner at Municipal Market Analytics, said the 6.39 percent interest rate is about 4.5 percentage points “more than a ‘regular’ issuer would pay, but CPS left ‘regular’ two years ago.

Tim Holler
National Real Estate Investor

Goldman Sells American Dream in Unrated Municipal-Bond Deal

Investors purchasing the American Dream bonds will need to weather the potential pitfalls: The 1,136-page offering statement includes 36 pages of risks, ranging from whether the project will be completed on time to the “difficulty, expense, unfamiliarity and time-consuming nature" of getting to the center.

Tim Holler
The Bond Buyer

New Jersey pension lottery plan is gamble: MMA

New Jersey Gov. Chris Christie’s proposal to used dedicated state lottery revenues to boost its underfunded pension system is not a viable solution, according to Municipal Market Analytics.

Tim Holler
MyNorthwest

Christie betting that lottery can bail out troubled pensions

Analysts and advocates say the deal — an arrangement that would be unique to New Jersey — probably won’t hurt, but there’s not a consensus on how much it might help.

Tim Holler
Bloomberg

Puerto Rico Bond Traders Still Find Buyers Despite Epic Collapse

Since that filing, the 50- and 200-day moving averages for daily trade volume have increased by 17 percent and 6 percent, respectively.

Tim Holler
WNYC News

From Tax Codes to Traffic, a Megamall’s Risks

Sixty-nine percent of American Dream's 2.9 million square feet of space has been leased to tenants like Saks, Lord & Taylor, and Primark. There will also be a Nickelodeon amusement park and a DreamWorks water park.

Tim Holler
MORNINGSTAR

S&P Downgrade Brings Illinois Closer to Junk--Update

Illinois also would have to make millions of dollars in termination payments on existing interest-rate swap contracts, according to S&P. Those penalties would be about $10 million in the event of a downgrade to junk by one rating firm, would reach $19 million if two firms gave the state a junk rating and could reach $108 million in the event of further downgrades.

Tim Holler
Bloomberg

Muni-Bond Vultures Rethink Risks Lurking in Market's Junk Yard

Distressed muni-debt traders usually buy when the credit rating of a bond is downgraded to junk status. That’s when institutions, such as mutual funds, are forced to sell or otherwise long-term retail investors get spooked.

Tim Holler
Bloomberg

Municipal Bonds Richest in a Year as Supply Dries Up in Summer

The rally in municipal debt comes as analysts expect supply to continue to shrink in the summer months at the same time that cash-rich investors will have a hoard to invest. Citigroup Inc. analysts predicted that the market will shrink by $39.5 billion between June and August, while investors will receive $44 billion in interest payments.

Tim Holler
Bloomberg

Local Governments' Hidden Reason to Oppose Tax Cuts: Bank Loans

Some local governments have a hidden reason to root against President Donald Trump’s tax-cutting agenda: It could make their bank loans more costly, according to Municipal Market Analytics.

Tim Holler
Chicago Sun Times

Under fire, Emanuel defends ‘payday loan’ plan to borrow $389M for CPS

“Borrowing against uncertain and late categorical funding from the state … may allow the district to remain open through the end of the school year and make its statutory pension payment, but it will come at a heavy price, both in terms of a high borrowing cost and the reputation of CPS. Worst of all, it does not help with the Chicago Public Schools’ budget shortfall next year and will, indeed, make it worse,” Msall said.

Tim Holler
Governing

Fresh Off Another Downgrade, Connecticut Has a Plan to Lower Borrowing Costs

Nappier wants the state to start offering investors revenue bonds that are paid back directly from the state’s income tax revenues. Called tax-secured revenue bonds, these new bonds would be offered in place of general obligation bonds, which are backed by the state’s general revenue collections. Nappier’s office believes the dedicated income stream would mean the bonds would fetch ratings as high as AAA, resulting in a better interest rate and lower debt service costs.

Tim Holler
Seeking Alpha

Muni Bond Ripple Effects Of The Puerto Rico Bankruptcy

There are major ripple effects as a result of this bankruptcy, and they affect large mutual funds, tax-free bond strategies for many retired investors, and scattered individual bond issues. The holistic concern is that risk is now being added to a sector where traditionally risk was considered to be extremely low.

Tim Holler
Washington Post - Bloomberg

Puerto Rico Debt Donnybrook Kicks Off With Default Squabble (1)

Emma Orr, Steven Church and Michelle KaskeMay 11, 2017 9:31 am ET

(Bloomberg) -- Dealing with Puerto Rico’s crushing debt has started to resemble a circular firing squad.

Simply put, the bankrupt island can’t pay everything it owes, so creditors are taking aim at each other as they squabble over who will get what’s left. But the debt’s size and the tangled process invented to rescue Puerto Rico mean there’s no established rule book to shape what comes next.

Tim HollerPuerto Rico
Governing

Chicago Public Schools May Fall Short on Upcoming Pension Payment

"The district doesn't have any good choices," said Matt Fabian, a partner at Concord, Mass.-based Municipal Market Analytics.

"Arguably, their biggest problem this year was relying on the state to help them in any way," Fabian said. "Their fundamental problem is they spend too much money they don't have, but really in fiscal year 2017, it's been relying on the state to fill that gap."

Tim HollerPuerto Rico
Nasdaq.com

Puerto Rico's Bankruptcy a 'Dramatic Reshaping' of Muni Risk

Municipal Market Analytics' Matt Fabian puts it in pretty start terms in his Default Trends report Friday. Here's his summary of his report:

Assuming all remaining Puerto Rico bonds end up in payment default, as now appears likely, the municipal market's total for bonds in default will have roughly doubled to $74B, with Puerto Rico issuers accounting for 85% of that total. This would also roughly double the municipal market's current default rate from 1.02% to 1.93% (versus 0.30% excluding Puerto Rico bonds). This is a dramatic reshaping of the industry's overall risk profile and will doubtless drive at least somewhat more conservative investor behavior in the future, in particular as regards large distressed governments like IL, NJ, CT, KY, and Chicagoland credits.

Tim HollerPuerto Rico
Legal Insurrection

Puerto Rico Declares “Bankruptcy” Due to $123 Billion in Debts

Municipal Market Analytics analyst Matt Fabian said, the pensioners could “still fare better than investors” since they “are more politically empathetic than Wall Street creditors and bond insurers.”

Tim HollerPuerto Rico
CNBC

Message of Puerto Rico debt crisis: Easy bets sometimes lose

When some of Wall Street's savviest hedge funds piled into Puerto Rico's debt in 2014, it seemed like an easy bet: Buy up the island's bonds at a discount, pocket the high interest and persuade politicians to make decisions that would raise the value of their investments.

Tim HollerPuerto Rico