News • Fri, Nov. 14
News • Fri, May. 23
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at MarketWatch.com (Feb 14, 2011)
at MarketWatch.com (Jan 14, 2011)
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Fri, Nov. 14, 3:13 PM
- The muni bond market typically slows towards the end of the year, but issuers - all trying to take advantage of low rates - might temporarily overwhelm demand in coming weeks, and allow for some bargains in the secondary market.
- "Individual investors should be paying close attention and remain engaged," says Morgan Stanley. "The potential for temporary periods of outsized ($8B or more) issuance specifically surrounding Thanksgiving week could also create a temporary supply/demand imbalance in the primary market."
- Longer-term, the team remains cautious thanks to its (and everyone else's) expectation that rates should rise next year.
- ETFs: MUB, PZA, TFI, XMPT, PRB, PVI, RVNU, VRD, FMB
Fri, Nov. 7, 2:25 PM
- Judge Steven Rhodes has ruled the city's restructuring plan - notable for the sizable losses it imposes on bondholders while preserving much of Detroit's pension liabilities - is fair and feasible.
- "The city is insolvent and desperately needs to fix its future," says Rhodes, who calls the Detroit's settlement with pensioners a nearly "miraculous" outcome.
- The city is expected to exit bankruptcy within weeks.
- ETFs: MUB, PZA, TFI, XMPT, PRB, PVI, RVNU, VRD, FMB
Fri, Oct. 31, 2:53 PM
- "October 1 was an academic exercise," says a pension-law expert. "[Thursday] was a reality check." The lawyer is referring to a bankruptcy judge yesterday approving Stockton, CA's reorganization plan which leaves untouched its pension obligations. On Oct. 1 that same judge had ruled Stockton could cut its payments to Calpers as it emerged from bankruptcy.
- Ultimately, city managers - already faced with a hard time retaining municipal workers - decided slashing pension benefits would force an even quicker rush to the exits.
- Losers when the ruling was issued, government pension plans and organized government labor groups are pleased, but advocates for pension reform say the reorganization plan is a mistake as it allows the city to exit bankruptcy without dealing with the pension obligations which helped put it there in the first place.
- Monolines today: Ambac (AMBC +4.7%), Assured Guaranty (AGO +1.8%), MBIA (MBI +1.1%).
- Muni ETFs: MUB, PZA, TFI, CMF, XMPT, PRB, PWZ, CXA, PVI, RVNU, VRD, FMB
Fri, Oct. 17, 4:10 AM
- Detroit has taken a major step towards exiting bankruptcy protection after agreeing to a deal with with its largest holdout creditor, Financial Guaranty Insurance Company, which is owed $1B.
- Under the settlement, Financial Guaranty will have the rights to develop a hotel, retail and condominium complex on the site of the Joe Louis Arena, the soon-to-be-vacant home the Detroit Red Wings hockey team.
- The dispute between Detroit and Financial Guaranty had threatened other important deals that the city had forged with thousands of creditors.
- ETFS: MUB, HYD, BAB, PZA, MUNI, TFI, ITM, HYMB, MLN, CMF, SHM, BABS, XMPT, PRB, SUB, PZT, SMB, NYF, SHYD, CXA, PWZ, PVI, SMMU, INY, VRD, GMMB, RVNU
Thu, Aug. 28, 8:04 AM
- Maybe not wanting competition for federal government debt, U.S. regulators are set to approve a final liquidity rule next week reportedly excluding municipal bonds from being among banks' high-quality, highly liquid assets. Treasurys and balances held at the Fed, of course, would be allowed.
- Wells Fargo (NYSE:WFC) - with $47.3B - is the largest holder of municipals among the four largest U.S. banks. It hasn't said how much of that amount is included in its liquidity tally, but did say it was compliant with the international rule and awaiting the final U.S. version.
- Both banks and local governments had naturally argued to include munis in the final rule. "[This] will almost certainly decrease liquidity in asset markets disfavored by the rule," says ABA President Frank Keating.
- Muni ETFs: MUB, PZA, TFI, XMPT, PRB, PVI, VRD, RVNU, FMB
- Financial sector ETFs: XLF, FAS, FAZ, UYG, VFH, IYF, SEF, IYG, FXO, FNCL, FINU, RWW, RYF, FINZ
Fri, Jul. 11, 1:59 AM
- U.S. municipal bond funds had some of the biggest outflows since January, after investors pulled out $790M in the week ended July 9. $691M of the outflows was in the high-yield sector, being withdrawn due to default concerns of Puerto Rican debt.
- Adding to the worries is Puerto Rico's newest law which allows for public corporations to restructure their debt. The new law pushed ratings agencies last week to downgrade the commonwealth's bonds even lower within junk territory.
- Barclays High Yield Municipal Bond Index, up more than 9.5% in mid-June, was up less than 5.5% this past Wednesday.
- ETFs: MUB, HYD, BAB, PZA, MUNI, TFI, HYMB, ITM, MLN, SHM, CMF, XMPT, BABZ, BABS, PRB, SHYD, SMB, NYF, PZT, SUB, PWZ, CXA, PVI, SMMU, INY, MUAF, VRD, MUAD, MUAE, GMMB, MUAC, MUAG, RVNU, MUAH, FMB
Mon, Jul. 7, 1:45 PM
- As detailed in a recent regulatory filing, Invesco Powershares will update the names and underlying indexes for 3 of its 4 municipal bond ETFs on July 8th.
- The PowerShares Insured California Municipal Bond Portfolio (PWZ) will be renamed to the PowerShares California AMT-Free Municipal Bond Portfolio and will start tracking the BofA Merrill Lynch California Long-Term Core Plus Municipal Securities Index.
- The PowerShares Insured National Municipal Bond Portfolio (PZA) will be renamed to the PowerShares National AMT-Free Municipal Bond Portfolio and will start tracking the BofA Merrill Lynch National Long-Term Core Plus Municipal Securities Index.
- The PowerShares Insured New York Municipal Bond Portfolio (PZT) will be renamed to the PowerShares New York AMT-Free Municipal Bond Portfolio and will start tracking the BofA Merrill Lynch New York Long-Term Core Plus Municipal Securities Index.
- Other CA, NY and national municipal bond ETFs: PZT, NYF, INY, MUB, PZA, TFI, CMF, XMPT, PRB, PWZ, CXA, PVI, VRD, RVNU, FMB
Fri, Jun. 27, 11:48 AM
- Losing $403M in funds last week according to Lipper, loan funds (also known as leveraged loans, senior loans, bank loans) saw their 7th consecutive week of outflows - this after a 95-week streak of inflows going back to June 2012. Popular for not just their yields, but the adjustable nature of said yields, a little digging finds the variable nature is tied to Libor - which won't rise until the Fed actually hikes. Further, most loans have Libor floors, which means their rates won't rise until Libor has moved about 75 basis points.
- ETFs: BKLN, SRLN, SNLN, FTSL
- Municipal funds and ETFs, however, saw their eighth consecutive week of inflows, taking in $234M last week. ICI data show even bigger gains, with $798M of inflows last week vs. $805M the week prior.
- ETFs: MUB, PZA, TFI, XMPT, PRB, PVI, VRD, RVNU, FMB
Tue, Jun. 24, 3:14 PM
- Acknowledging recent heavier municipal issuance of late has been met by solid demand, Citi nevertheless sees "significant reasons for concern," notably anemic muni bond fund flows. With issuance continuing on the heavy side, the team wonders about the capacity of the market to hold unless fund flows rebound. Toss in possibly rising Treasury yields and the effect could be magnified.
- "We are not, however, suggesting that a very sharp selloff is likely," says Citi noting a huge amount of cash on the sidelines waiting to buy on any significant rebound in yields.
- ETFs: MUB, PZA, MUNI, TFI, ITM, MLN, SHM, XMPT, PRB, SMB, SUB, PVI, SMMU, MUAF, VRD, MUAE, GMMB, MUAD, MUAC, MUAG, MUAH, RVNU, FMB
Mon, Jun. 16, 3:21 PM
- Moody's boosts New York's credit rating by a notch to Aa1 with stable outlook from Aa2 with positive, reflecting "sustained improvements in fiscal governance, the strength of the recent economic recovery, a strong financial position reflected in improved reserves, and reduced spending growth in line with growth in the state’s economic capacity."
- "The stable outlook reflects our expectation that the state will preserve and improve upon the gains it has made in governance and its financial position."
- ETFs: MUB, PZA, TFI, XMPT, PRB, NYF, PZT, PVI, INY, VRD, RVNU, FMB
Tue, Jun. 3, 3:33 PM
- Issuers have scheduled $11.7B of long-term sales over the next month - the busiest pace in three months - and it's a good thing as investors are about to get the most cash ($104B) in two years from June through August from debt payments, according to JPMorgan's Peter DeGroot.
- The funds received will exceed issuance by about $23B over those months, according to DeGroot, helping to extend munis' best first half rally since 2009.
- ETFs: MUB, HYD, BAB, PZA, MUNI, TFI, ITM, HYMB, MLN, CMF, SHM, BABZ, BABS, XMPT, PRB, SHYD, SUB, SMB, NYF, PZT, CXA, PWZ, PVI, SMMU, INY, MUAF, VRD, MUAD, MUAE, GMMB, MUAC, MUAG, RVNU, MUAH, FMB
Fri, May. 30, 2:47 AM
- Municipal-bond prices have soared so far in 2014, compared to the same time one year ago. 2013 was the markets worst year in almost two decades, after registering losses nationwide - ranging from Detroit's municipal bankruptcy-protection filing to pension costs in Illinois.
- The revival of the $3.7T municipal-bond market comes as bond buyers attempt to find higher investment returns amid dropping U.S. interest rates.
- Investors have also poured $3.1B into municipal-bond mutual funds this year, compared with $2.9Bn over the same period in 2013.
- Municipal bonds have returned 5.8% in 2014, reflecting interest payments and price appreciation.
- Yields on municipal debt fell to 2.3% this past Wednesday, which was their lowest in almost a year. Yields fall when prices rise.
- ETFs: MUB, HYD, BAB, PZA, MUNI, TFI, ITM, HYMB, MLN, CMF, SHM, BABZ, BABS, XMPT, PRB, SHYD, SUB, SMB, NYF, PZT, CXA, PWZ, PVI, SMMU, INY, MUAF, MUAD, VRD, MUAE, MUAG, MUAC, GMMB, FMB, RVNU, MUAH
Fri, May. 23, 10:52 AM
- 2013 produced the slowest annual rate of municipal debt growth in 20 years, says Moody's, which expects the trend to continue this year. The trend "reflects a new conservative attitude toward debt among the states," says analyst Kimberly Lyons.
- The slow pace of borrowing led to a decline in net-tax support debt (NTSD) per capita to $1,054 from $1,074 in 2012.
- In other news, municipal bond funds posted their third straight week of big inflows, adding $664M in the week ended on Wednesday (previous weeks saw $616M and $943M of inflows).
- ETFs: MUB, HYD, BAB, PZA, MUNI, TFI, ITM, HYMB, MLN, CMF, SHM, BABZ, BABS, XMPT, PRB, SHYD, SUB, NYF, SMB, PZT, CXA, PWZ, PVI, SMMU, INY, MUAF, MUAD, VRD, MUAE, MUAG, MUAC, GMMB, MUAH, RVNU, FMB
Thu, May. 15, 4:04 PM
- “A lot of the opportunities have been washed away in the last month and a half,” says BNY Mellon fixed income director John Flahive. “There really isn’t much out there.”
- The muni market is ahead 6.2% YTD, its strongest start since 2009, and benchmark 10-year muni yields have dipped to 2.29%. At work is the general rally in fixed income coupled with a decline in issuance.
- The fund has about $961M in assets vs. an original target size of $1B, and has beaten 83% of peers over the past five years.
- Muni ETFs: MUB, HYD, BAB, PZA, MUNI, TFI, ITM, HYMB, MLN, CMF, SHM, BABZ, BABS, XMPT, PRB, SUB, NYF, SHYD, SMB, PZT, CXA, PWZ, PVI, SMMU, INY, MUAF, MUAE, MUAD, VRD, GMMB, MUAC, MUAG, MUAH, RVNU
Mon, May. 12, 4:30 AM
- Stockton is due in court today for a four-day hearing today in which the bankrupt Californian city will attempt to win approval for a plan to pay creditor Franklin Resources (BEN) just 1% of the $35M that the company is owed.
- The case is rare, as these types of disputes are usually settled out of court. However, the hearing could presage a much larger showdown involving Detroit and its creditors.
- ETFs: MUB, HYD, BAB, PZA, MUNI, TFI, ITM, HYMB, MLN, CMF, SHM, BABZ, BABS, XMPT, PRB, SUB, SMB, SHYD, CXA, PWZ, PVI, SMMU, VRD, GMMB, RVNU
Thu, May. 8, 12:48 PM
- The First Trust Managed Municipal ETF (FMB) will offer investors current income through municipal bond investments which is exempt from regular federal income taxes.
- According to a statement issued by First Trust: "Recent tax increases have boosted the demand for tax-exempt investments. At the same time, some municipalities have been facing increasing economic challenges, raising the importance of active credit analysis and municipal bond expertise."
- There are currently three other actively managed municipal bond ETFs on the market, all of which feature a focus on maturity: the PIMCO Intermediate Municipal Bond Strategy (MUNI), the Columbia Intermediate Municipal Bond ETF (GMMB) and the PIMCO Short Term Municipal Bond Strategy ETF (SMMU).
- Other municipal bond ETFs: MUB, PZA, TFI, ITM, MLN, SHM, XMPT, PRB, SUB, SMB, PVI, VRD, RVNU
PZA vs. ETF Alternatives
The PowerShares National AMT-Free Municipal Bond Portfolio (Fund) is based on The BofA Merrill Lynch National Long-Term Core Plus Municipal Securities Index (Index). The Fund generally will invest at least 80% of its total assets in municipal securities that comprise the Index and that also are exempt from the federal alternative minimum tax. The Index is composed of US dollar-denominated, investment grade, tax-exempt debt publicly issued by US. states and territories, or their political subdivisions, in the US domestic market with a term of at least 15 years remaining to final maturity. The Index is adjusted monthly and its constituents are capitalization-weighted based on their current amount outstanding. The Fund and the Index are rebalanced and reconstituted monthly.
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