The American Dream Mall Had Retail Problems Before Coronavirus. Now, They’re Worse.

Don Ghermezian, who is overseeing the project for Triple Five, said in April that he had made a strategic shift in the makeup of the complex, from a 55%-45% entertainment to retail split to 70% entertainment, 30% retail mix.

But as analyst Lisa Washburn, managing director at Municipal Market Analytics noted in the Bond Buyer, that shift likely was driven by the challenged retail sector “rather than a demand-supported strategic business decision.”

https://www.forbes.com/sites/joanverdon/2020/06/14/the-american-dream-mall-had-retail-problems-before-coronavirus-now-theyre-worse/#7871d10473e4

Wall Street Risk Analysts Rise in the Muni Bond Market

Defaults have remained relatively rare compared with other markets, though they’ve started to rise. In a note to clients last week, Municipal Market Analytics said at least 29 borrowers became impaired in May, which includes defaults and steps like tapping reserves to avoid them. That’s the most since December 2014, according to MMA.

https://www.bloomberg.com/news/articles/2020-06-09/wall-street-risk-analysts-rise-in-muni-market-waiting-for-hit

Are public pensions doomed because of the coronavirus pandemic? State, local budgets feel pain

Governments will likely rely heavily on “gimmicks” to balance their budgets in the current situation, including short-term borrowing to cover deficits, drawing heavily on reserves, deferring certain costs until the next fiscal year or even extending the fiscal year, predicts Matt Fabian, partner at Municipal Market Analytics, which provides information on the health of municipalities and their debt.

“It worsens the long-term situation” for pensions, Fabian says.

Budget gimmicks are already happening, he says. For example, the state of New Jersey has already extended the end of its fiscal year from June 30 to Sept. 30 after the federal government extended its tax filing deadline to July 15, which affects state income tax receipts, whose revenue helps fund pensions.

https://www.usatoday.com/story/money/2020/06/04/coronavirus-pensions-retirement-covid-19-state-local-budget-markets/5198176002/

Hospitals Burn Through Cash While Congress Weighs Next Stimulus

High-yield hospital bonds have lost 6.4% this year, according to Bloomberg Barclays indexes.

“Of all the sectors in the municipal market, the health-care sector has the most long-term volatility because of the pandemic,” said Matt Fabian, an analyst at Municipal Market Analytics. “The federal government is pouring support into the health care sector and will likely continue to do so.”

https://www.bloomberg.com/news/articles/2020-03-31/hospitals-burn-through-cash-while-congress-weighs-next-stimulus

Fed Expands Emergency Program to Include Muni Funds After Rout

”It’s a major help to high-grade municipals, where liquidity pressures have concentrated on money market funds,” said Matt Fabian, a partner at Municipal Market Analytics, an independent research firm. “The program gives the funds an ability to afford investor redemptions without creating additional pressure on the underlying assets. Of course, liquidity is an issue all along the curve, but giving the front a boost is better than nothing.”

https://www.bloomberg.com/news/articles/2020-03-20/fed-expands-money-mkt-facility-to-include-some-municipal-debt

Sleepy municipal-bond market goes 'dystopian'

In fact, New York municipal bonds of all stripes are getting thumped as investors brace for the full economic impact of Covid-19.

“The word I use is dystopian,” said Matt Fabian, a partner at Municipal Market Analytics, an independent research firm.

Muni bonds are ordinarily among the market’s safest investments, with a default rate of 0.18%, and New York’s bonds are considered best-in-class. The credit ratings for New York City and the state are both one notch below AAA, according to Moody’s, which on Feb. 20 praised the state for taking “proposed strong measures to correct its unfavorable spending trend.”

https://www.crainsnewyork.com/coronavirus/sleepy-municipal-bond-market-goes-dystopian

A Bid to Shame Muni-Disclosure Derelicts Draws Industry’s Fire

Her group is among those that have since weighed in on the proposal by submitting comments to the SEC, which has the final say on the MSRB’s rules. Among them is the National Federation of Municipal Analysts, a bond-analyst group that generally welcomes more information.

Yet the group said the MSRB’s timer could be misleading, inaccurate or error-prone enough to do more harm than good. For example, they said the clock could be triggered by a filing that’s not the audited financial statement, potentially making tardy filers look better than speedy ones. “It will be comparing apples to oranges,” said Lisa Washburn, a Municipal Market Analytics managing director who works with the analysts group.

There’s also the possibility a government that has neglected its duty for years could simply reset the clock when it files documents ahead of a new bond sale, leaving would-be buyers unaware that it has a history of not keeping them up to date about the state of its finances. Moreover, there’s no universal deadline in the disclosure agreements governments sign, so a day count wouldn’t necessarily let an investor know if they’re not living up to their promises.

https://www.bloomberg.com/news/articles/2020-02-18/a-bid-to-shame-muni-disclosure-derelicts-draws-industry-s-fire

Ransomware Attack on Hospital Shows New Risk for Muni-Bond Issuers

“The resolution of the situation will likely cost the hospital via monetary settlements and security hardening, making a financial rebound a bit more difficult than otherwise,” MMA said in its report. “Pleasant Valley highlights cyber risks as, at least so far, primarily a worsener for most municipal credits.”

https://www.bloomberg.com/news/articles/2020-02-05/ransomware-attack-on-hospital-shows-risk-for-muni-bond-issuers

risQ and Intercontinental Exchange Announce Collaboration to Bring Climate Risk Analytics to the Municipal Bond Ecosystem

Commenting on the announcement from his broad and deep perspective on the industry, Tom Doe, CEO of Municipal Market Analytics (MMA) only sees it as a positive for the market. “MMA has prided itself on providing thought leadership to the municipal bond sector for over two decades, and climate risk is increasingly coming to the forefront of our thinking,” said Doe. “risQ and ICE working together is as timely as it is critical.”

ICE Data Services and risQ plan to launch the municipal climate package by the end of the first quarter of 2020.

https://www.businesswire.com/news/home/20200108005592/en/risQ-Intercontinental-Exchange-Announce-Collaboration-Bring-Climate

Puerto Rico’s sputtering economy shows risk of fiscal plan

“There’s no reason to assume that long-term population and economic decline won’t resume,” said Matt Fabian, partner at Municipal Market Analytics. “This doesn’t, on its own, mean Puerto Rico will default again, but it suggests Puerto Rico’s finances and infrastructure will still be fragile when the next shock occurs.”

https://eresearch.fidelity.com/eresearch/markets_sectors/news/story.jhtml?storyid=201912231340SM______BNDBUYER_0000016f-0f57-dbce-a17f-dff7edb60000_110.1

Investors Seeking Yield Weaken Muni-Bond Safeguards

“The only movement this year has been toward lighter covenants,” says Matt Fabian, a partner at Municipal Market Analytics. “Next year is geared for more of the same -- slowly tighter spreads, steadily strong demand.”

https://www.newsmax.com/finance/streettalk/muni-bond-safeguards-weakened-as-investors-scrounge-for-yield/2019/12/20/id/946854/

Wall Street’s Muni-Bond Bankers Brace for a Record Year in 2020

Municipal Market Analytics doesn’t see annual issuance dropping below $400 billion in any of the next five years. Unless there’s an unexpected material rise in interest rates, “there is more upside than down to these numbers, particularly in the out years as more state and local issuers sell bonds for water and transportation projects and to address local economic vulnerabilities from climate change,” said Matt Fabian, a partner at the firm

https://au.investing.com/news/stock-market-news/wall-streets-munibond-bankers-brace-for-a-record-year-in-2020-2010418

Chicago Passes $11.65 Billion Budget as 2021 Concerns Loom

The city is taking all those savings in one year, rather than spreading it out over several years. This planned refunding that seeks to “realize disproportionate savings in the short-run” is “an unsustainable budgetary practice that should be avoided,” Matt Fabian, partner at Municipal Market Analytics, said in an emailed report.

Fabian also warned that Chicago’s task of balancing budgets in upcoming years, including 2021, may pose challenges.

“A failure to raise taxes now, while the local economy is reasonably strong, raises the risk of an eventual hike being proposed when growth is weaker or even negative: a very hard environment to present recurring budget solutions,” Fabian said in his report

https://www.bnnbloomberg.ca/chicago-passes-11-65-billion-budget-as-2021-concerns-loom-1.1353919

Muni Bonds Contain New Fine Print: Beware of Climate Change

When state and local governments issue debt, federal securities laws hold their bankers accountable for making sure that states and cities adequately disclose the risks bond buyers are taking on. These might include any lawsuits a town is facing, or how the sales taxes used to pay back bondholders could fluctuate in a recession. Now many of these documents include language about climate change, hurricane risks, and rising seas. “Every bank should be asking their clients about this risk,” says Christopher Hamel, a senior fellow at Municipal Market Analytics and former head of municipal finance at RBC Capital Markets.

https://www.bloomberg.com/news/articles/2019-11-05/how-serious-is-the-climate-change-risk-ask-a-banker

Muni-Bond Desks Stand to See Big Wins If Trump Loses

Democrats’ plans for new social programs could provide a boost to state and local governments’ finances as well, said Matt Fabian, a partner at research firm Municipal Market Analytics. States could use the help: federal grants for services like transportation and education stand at the lowest level as a percentage of the economy since 1989, according to a 2018 report by the left-leaning Center on Budget and Policy Priorities.

“The wealth tax is likely to expand federal spending, which would take some of the burden off of state and local spending,” Fabian said. But, he added: “We’re still a long way from talking about it to actually implementing it.”

https://www.newsmax.com/finance/streettalk/muni-bond-desks-wins/2019/10/31/id/939599/

What Climate Change Could Do to Cities' Power to Borrow Money

Municipal bonds are considered a conservative investment, with a current default rate of around 0.3 percent, according to Matt Fabian, a partner at Municipal Market Analytics. To date, the bond market has done little to reflect that the risk may be increasing.

“There is almost no impact on muni bond prices with respect to climate change vulnerabilities. Prices do not acknowledge the risk in climate change,” he said. “Most investors believe that [climate change] is going to start affecting the market right after their own bonds mature.”

As more investors and firms study the risks, however, that might change.

“We are about a year away from climate change beginning to affect the muni market—a little,” Fabian said. “Changes on the investor side are going to happen first, [credit] ratings will come second, and issuer behavior will be a distant third.”

https://www.citylab.com/environment/2019/10/climate-change-could-make-borrowing-costlier-states-and-cities/599464/

Popular in Wisconsin: Cheese, the Packers and...Risky Bonds

The agency’s bonds have been the subject of 10 of the 105 reports of impairment in the municipal market so far this year, according to research firm Municipal Market Analytics, by far the highest of any issuer.

“The PFA is producing some of the riskiest debt in the municipal market,” said MMA partner Matt Fabian. Impairments can range from having to rely on reserves to default.

https://www.wsj.com/articles/popular-in-wisconsin-cheese-the-packers-and-risky-bonds-11569922203?mod=searchresults&page=1&pos=1

Muni-Bond Investors Embrace Higher-Risk Issuers

High-yield municipal funds rake in $14 billion as investors flock to lower-rated deals

The sale of riskier new bonds, combined with the deterioration of some existing debt, has increased the amount of junk-rated and unrated debt outstanding by 20% since 2012, according to Municipal Market Analytics and the Federal Reserve.

It remains a small slice, about 9%, of the $4 trillion muni-bond market, according to MMA and Fed data. But high-yield municipal funds have attracted more money in the year to August than in any other year on record, drawing $14 billion, according to Refinitiv data going back to 1992.

https://www.wsj.com/articles/muni-bond-investors-embrace-higher-risk-issuers-11569073815

Distress Rises in Muni-Bond Market as More Borrowers Face Strain

Distress is rising in the $3.8 trillion municipal-bond market.

The number of borrowers reporting so-called impairments, such as a breach of the financial terms contained in the securities contracts, rose to 101 so far this year, up 41% from the same period in 2018, according to Municipal Market Analytics. At the same time, 33 skipped interest payments for the first time, compared with 21 a year earlier, though the size of the outstanding debt involved declined.

Sales of bonds by borrowers in the riskiest corner of the municipal market have increased in recent years as low interest rates leave investors...

https://news.bloomberglaw.com/banking-law/distress-rises-in-muni-bond-market-as-more-borrowers-face-strain

Anything goes in today’s muni bond market

“It is a very aggressive market — but to say that it is frothy means that this is the end of it, and I don’t know,” said Matt Fabian, a partner with Municipal Market Analytics, an independent research firm. “A year from now, we might be yearning for the discipline of 2019.”

Some money managers have started to pull back. Vanguard Group Inc. has cautioned against taking too much risk as the economy’s record-long expansion makes a recession look overdue. Goldman Sachs Group Inc. earlier this year shifted a record amount of its high-yield municipal fund into investment grade debt, anticipating that some of the projects financed by the securities may run into distress.

https://finance-commerce.com/2019/08/anything-goes-in-todays-muni-bond-market/