Wed, Jun. 8, 11:52 AM
- "We as municipal market participants should really be penalizing in some way, by almost not giving them any access to the market,” says Peter Hays, who oversees $119B as head of municipal bonds at BlackRock.
- He notes Illinois is a state that refuses to pass a budget, and has the lowest funded ratio on their pension of any state.
- The term "bond vigilantes" was invented with regards to investors forcing discipline on national governments, but they've been mostly absent from the $3.7T municipal market, despite a number of notable bankruptcy filings of late, as well as Puerto Rico's issues.
- The lowest-rated U.S. state, Illinois this week announced plans to borrow $550M for capital projects on June 16. For now, investors are demanding an extra 183 basis points to hold Illinois 10-year debt vs. AAA munis. Still the yield is just 3.42% - that's 20 basis points lower than four years ago, when Illinois had a two-step higher credit rating than it does today.
- ETFs: MUB, NVG, IIM, NUV, PML, NZF, LEO, PZA, PMF, NEA, PMX, VMO, BFK, EVN, BLE, NXP, KTF, DSM, EIM, VGM, AFB, NPM, PMM, VKI, BKN, MVF, NQM, TFI, MYI, IQI, MUA, OIA, MVT, XMPT, MEN, NPI, MYD, VKQ, NMO, PMO, MUE, MMU, NAD, NPP, BBK, EXD, NEV, BYM, NQS, DMF, MFL, BBF, MFM, KSM, MHD, EIV, MQY, MUH, BAF, MFT, MUS, MZF, PRB, MNP, EOT, NUW, DMB, DTF, MQT, NPF, BSD, MYF, NXR, CXH, NXQ, NIM, NMI, VTEB, FMN, VFL, PVI, RVNU, FMB
Jul. 16, 2015, 3:39 PM
- "That's stunningly high," says Van Eck chief municipal strategist Jim Colby, after Chicago priced $1.1B in both taxable and tax-free bonds. The taxable issue maturing in 2042 priced to yield 7.98%, and the tax-free paper maturing in 2039 priced to yield 5.69% - a taxable equivalent yield of 9% (for the highest bracket).
- The debt has been rated BBB+ by Fitch.
- "Chicago is not Detroit," says Colby, who calls this new debt "far and away" the best value of similar credit quality in municipals. He notes the 30-day yield of his Market Vectors High Yield Municipal Index ETF (NYSEARCA:HYD) is just 4.61%.
- ETFs: MUB, IIM, HYD, NUV, PML, NIO, MAV, PZA, LEO, MHI, VMO, NEA, PMF, NMZ, PMX, BFK, EVN, BLE, DSM, KTF, NQU, NXP, VGM, PMM, AFB, VKI, MVF, HYMB, EIM, NQM, NPM, TFI, OIA, BKN, MUA, MEN, PMO, MVT, IQI, MYD, VKQ, NMO, MYI, XMPT, NPI, CMU, MMU, MUE, CXE, EXD, NAD, NMA, BBK, BYM, NPP, NQS, NEV, DMF, MFL, NZF, NVG, NQI, KSM, NPT, MHD, MFM, MUH, NXZ, MQY, SHYD, MFT, MZF, PRB, EIV, BBF, MHF, BAF, EOT, MUS, NUW, NXR, DTF, NPF, MNP, BSD, NXQ, MQT, MYF, DMB, NIM, NMI, CXH, BIE, FMN, PVI, VFL, RVNU, FMB
To achieve a high level of current income that is exempt from federal income tax, consistent with the preservation of capital. It will invest at least 80% of its assets in a portfolio of long-term, tax-exempt municipal bonds that are rated investment grade
Industry: Closed-End Fund - Debt
Country: United States