Perspectives Blog

Detroit bankruptcy — One year later

Ty Schoback, Senior Municipal Analyst | August 18, 2014

…idered unsecured obligations and subject to impairment within the confines of Chapter 9. In the summer of 2013, Detroit filed the largest municipal bankruptcy in history. One year on, how has the filing played out and what insights can be gleaned? Detroit’s bankruptcy has not had negative systemic effects on the broader municipal market, as we ventured in our Making sense of Detroit’s bankruptcy filing  piece last summer. We continue to maintain…

Municipal market ghosts of past, present and yet to come

James Dearborn, Head of Municipal Bonds | December 9, 2013

…Yet to Come: Unfortunately, this vision of Christmas has already arrived in the form of downtrodden and bankrupt Detroit, with acres of abandon buildings, near non-existent public services and economic despair on every corner. Indeed, Christmas in Detroit looks bleak, and for employees and retirees the future looks bleaker as Judge Rhodes ruled that state guarantees of pension benefits could be trumped by U.S. bankruptcy court law. Surely, there…

Trouble in paradise: Q&A about Puerto Rico bonds

Chad Farrington, CFA, Head of Municipal Bond Credit Research and Senior Portfolio Manager | January 2, 2014

Why has Puerto Rico become such an issue now? Should investors be concerned with a downgrade or default? Is Puerto Rico a systemic risk for the municipal market? Historically, Puerto Rico (PR) bonds’ high yield and triple tax exemption (federal, state and local) had been a big lure for many institutional investors, such as mutual funds. PR debt exposure in municipal bond funds, namely single-state municipal bond funds, proved advantageous for sh…

Gut check: The outlook on fixed income

Colin J. Lundgren, CFA, Head of U.S. Fixed Income | February 24, 2014

The next big move in rates may be triggered by concerns about possible future Fed rate hikes. High-quality bonds may struggle to generate coupon-like returns. Emerging markets may ultimately benefit from the synchronized uptick in growth in global developed markets. With nearly two months of the year behind us, we thought now would be a good time to see how the fixed-income market is faring in 2014 and assess our outlook. We asked our investme…

Puerto Rico’s double-downgrade

Michael Taylor, Senior Municipal Analyst | February 10, 2014

What’s behind the downgrade of Puerto Rico’s credit ratings by Standard & Poor’s and Moody’s? The double-downgrade puts pressure on Puerto Rico to shore up its finances in the coming weeks A future default or debt restructuring could rattle investor confidence and impact all municipal market issuers On February 4, Standard & Poor’s lowered its long-term credit rating on the Commonwealth of Puerto Rico’s (PR) general obligat…

Navigating the municipal bond market

James Dearborn, Head of Municipal Bonds | February 5, 2014

In recent months there has been a lot of concern and anxiety in the municipal bond market, and investors remain skittish. Although the general trend in municipal credit is positive, investors should be mindful of the risks associated with Puerto Rico municipal bonds. We believe the combination of high tax equivalent yields, increasing tax rates, a steep yield curve and improving fundamentals result in higher tax revenues and restrained spending…