Market Update for 2014
|
|
- Walter Summers
- 3 years ago
- Views:
Transcription
1 By Matt Posner
2 The world of public debt management has undergone more change in the past two years than it has in the last two decades. A new regulatory landscape has emerged with the Dodd-Frank Act reforms, and after a 30-year bull market, with its steady decline in interest rates, the Federal Reserve appears to be increasing the federal funds target rate soon. It will likely increase borrowing costs for municipal issuers. Meanwhile, the municipal bond industry which was known as the sleepy market for much of its existence is suddenly grappling with new credit trends and negative headlines as a result. Government finance officers need to be vigilant in navigating this changing landscape, especially when raising capital through the municipal market. Outlined in this article are areas that are particularly important to monitor over the next year. MARKET FORECASTS For most bond market participants, the single most important development to monitor over the next 6 to 12 months is whether the Federal Reserve raises the federal funds target rate. (When it rises, interest rates will likely rise, increasing borrowing costs for municipal issuers.) Related trends that finance officers should watch for include the following: Timed Rate Hikes and Investment Exits. Mutual fund investors in recent history have tried to time rate-hikes or exit their investments before rates rise. This behavior has a large effect because mutual funds are the second-largest way investors invest in municipal bonds. In 2013, when investors fled the market, it was not able to digest the number of municipal bond fund redemptions, resulting in one of the most volatile summers in recent history. This year has already experienced rate-related outflows from municipal bond mutual funds. If these outflows continue or increase, issuers costs for capital might rise from 75 to 190 basis points. Growing Interest from Institutional, Opportunity- Oriented Investors. As mutual fund investors force redemptions, institutional investors are likely to moderate volatility by staying in the market, as they have done in the past. Banks The municipal bond industry which was known as the sleepy market for much of its existence is suddenly grappling with new credit trends and negative headlines. and insurance companies have played a greater role as municipal bond investors during the last 18 months in fact, banks have increased their municipal holdings by more than $60 billion during this time, according to Federal Reserve flow of funds report data. These data are publically available and can help finance officers in discussions with their advisors before coming to market because different types of investors are active during different times. A Drop in Issuer Refundings. The 2015 trend of global interest rate increases has narrowed or closed the opportunity for municipal refundings. May and June 2015 municipal issuance data (from Bloomberg) showed a drop in issuer refundings as rates rose during those months. We expect refunding volume to diminish as the rate environment grows more adverse. This, coupled with a sustained drop in new-money issuance, could result in a net decline in overall issuance volume in the second half of the year a silver lining for issuers planning to borrow in 2015, as the supply/demand balance becomes more favorable. MARKET TRENDS Perhaps the most important market stresses for issuers in the near term have to do with the situations in Puerto Rico and Chicago, Illinois. Earlier this summer, Puerto Rico s governor told the New York Times that its debt load was not payable 1 and as a result, the island will likely see a broad restructuring and probably default on a significant portion of its $70 billion in outstanding debt potentially the largest default in market history. This scenario, which has since come to pass, affects the general market. Mutual fund investors tend to react quickly to negative press and in most cases, mutual funds that own a substantial amount of Puerto Rico bonds (because they are exempt from federal, state and local taxes) also own other municipal bonds. Thus, when faced with investor redemptions, funds will sell bonds that are more liquid (i.e., higher-rated credits from across the country), creating negative pressure on the broader market. Moody s May 2015 downgrade of Chicago to junk status the result of the city s inability to create a viable pension August 2015 Government Finance Review 39
3 funding plan has already borrowing costs across the country. Just after the downgrade, Chicago s bonds traded at significantly higher yields (which was expected). Soon after that, the market for the State of Illinois general obligation (GO) credit rating not related to Chicago s GO, although the state has its own pension funding concerns also began to trade cheaper. Next, the State of New Jersey which is dealing with its own pension issues saw its appropriation-backed debt begin to trade at 40 to 60 basis points cheaper in secondary markets in response to the Chicago downgrade. (Large institutions sold the New Jersey bonds, looking to unload exposure to another credit that could face similar pension-related downgrades.) Recall that trades in the secondary market on fixed-coupon bonds will not affect an issuer s borrowing costs because the levels were fixed during issuance. But when the bonds begin to trade Government finance officers need to be vigilant in navigating the changing landscape, especially when raising capital through the municipal market. cheaper in secondary markets, as was the case for New Jersey, it sets new expectations for when the issuer has to come to market in the future. Thus, New Jersey s borrowing costs on its appropriation-backed debt are expected to be higher in the future, in part because of the downgrades in Chicago. The contagion did not stop there. In the weeks that followed, Pennsylvania and Connecticut states that also have challenging pension liabilities were forced to pay higher borrowing costs in bond deals (see Exhibit 1 to see how the market is penalizing Illinois, New Jersey, Pennsylvania and Connecticut). An unrelated credit event (in this case, Chicago s downgrade) has rarely had such a distinct negative impact on the borrowing costs of states and localities. As such, issuers should consider and monitor the broader ramifications of elevated investor focus on pension liabilities. Exhibit 1: State GO Basis Point Spread to MMA AAA and 10 Year Yield n June 30, 2015 n 10 Year (percent) Basis Points Yield Percentage PR IL NJ PA CT MI WA CA WI OH TX MA FL MD MN SC NY TN GA VA NC MMA 0 40 Government Finance Review August 2015
4 RATING TRENDS In recent years, Standard & Poor s and Moody s Investor Service have altered rating methodologies for municipal sectors. Trending positive: S&P released a new methodology in 2013 for local government GO credit ratings, which was part of the agency s efforts to make the rating assignment process more transparent and its results more contextualized. Because of municipals inherently positive credit factors and their strong repayment performance relative to other sectors, this has a net positive result. Trending negative: Moody s has refined its methodology to increase the importance of pension liabilities on rating outcomes and affirmed its negative outlook on the local government sector. Local government issuers may want to review each rating agency s updated criteria to determine whether they are likely to be affected. The 2015 trend of global interest rate increases has narrowed or closed the opportunity for municipal refundings. quarter of 2015, uninsured, singlerated new deals made up 48 percent of all new issuance (compared to 33 percent in 2008). This increase can be attributed to issuers looking to lower borrowing costs because of budget pressures, the increase in rating fees, and growing regulatory expenses. But less credit information can undermine retail investor confidence and increase yields on new bond offerings for issuers that choose to go with a single rating. A decline in ratings use can also provide less credit guidance to issuers themselves, as many decision makers at the state and local level use ratings as a tool to guide and legitimize financial decisions. Finance officers making rating decisions should include these factors in their decision making because more single ratings are expected in the near term, which may only exacerbate the themes mentioned previously. Split Ratings. These new criteria have increased issuers split ratings (when the agencies assign different ratings to the same issuer). In 2014, the number of issuers with different ratings from Moody s and S&P increased to 46 percent on all investment-grade rated bonds a trend that seems unlikely to abate in the near future. The effect of split ratings is negative because it can erode confidence in the ratings themselves and reduce the pricing relevance of ratings. As a result, investors tend to rely more on their internal credit research, which exposes issuers to a broad array of creditrelated concerns (i.e., specific concerns outside of traditional factors such as pension funding, state oversight of a local issue, and/or continuing disclosure practices). Issuers don t know what factors will be important to different investors in a bond deal, making the price expectations much more challenging. Further, to the extent that diverging opinions make a credit profile more ambiguous, the role of non-credit related factors such as the size of the bond deal, a specific call or coupon structure, or even the timing of a bond deal become more relevant. Once again, these factors add more unknowns to a bond deal, and split ratings may make them more relevant. BENCHMARKING AND TRANSPARENCY Benchmarking is an important practice when pricing bonds, and the Municipal Market Data (MMD) AAA yield curve is the most commonly used tool for municipals. The use of benchmarks has also become more important to the Single Ratings. Perhaps a more important shift has been the increased use of a single rating. Through the first August 2015 Government Finance Review 41
5 regulatory community, to help issuers evaluate their cost of issuing bonds and to help investors make decisions. The Municipal Securities Rulemaking Board (MSRB) may be adding more pricing information to its Electronic Municipal Market Access (EMMA) system to create greater transparency and provide trading information. While many government officials are well versed in using benchmarks to evaluate their investment portfolios, they do not understand the critical role MMD plays in their eventual municipal borrowing costs. What is MMD? MMD is a set of theoretical yields for AAArated state GO bonds that mature from two to 30 years. It is the guide many market participants use to discern prices in the market. The data set is determined by the MMD analyst team and the curve represents the MMD analyst team s opinion [emphasis added] of AAA valuation based on institutional block size market activity in both the primary and secondary municipal market. 2 Thus, the day-to-day inputs are subjective and there are no other clear guidelines in how the information is created. This means that issuer borrowing costs are associated with a market opinion, the construction of which is not well understood. MMD s Current Significance. Most municipal bond deals are anchored to MMD, so it directly correlates to the cost of borrowing. Most other fixed-income markets price bonds relative to an index or a highly traded security. For example, most corporations issue their bonds at a defined basis point spread over a U.S. Treasury bond. When a municipal issuer plans to sell bonds, it often has several conversations with its municipal advisors and underwriters about the types of prices to expect. In a negotiated sale, price views are circulated to potential investors that in many cases offer the price as a spread to MMD or how many basis points higher or (sometimes) lower than the MMD dataset. Unlike their corporate counterparts, there are no widely adopted transparent indexes for municipal bond deals. Instead, the financial professionals aiding an issuer will make a decision to offer a certain amount of yield relative to where MMD was published that day. For most bond market participants, the single most important development to monitor over the next six to 12 months is whether the Federal Reserve raises the federal funds target rate. Burden of Proof. It becomes more important to keep in mind that MMD reflects an opinion, not an index of underlying securities, when considering the rules that the Internal Revenue Service (IRS) has proposed for underwriters and issuers when pricing bond deals. The IRS s proposed price guidance, published in June 2015, revised the standards for what establishes the initial offering price of bonds. If those standards are not met, and the underwriter changes prices to correspond with the market, the burden of proof to establish the issue price must be based on a broad-based index of municipal bond interest rates on bonds similar to the type and credit rating of the bonds being sold. 3 This burden of proof can become an issue because bond prices are likely directly linked to MMD s opinion, which is not an index. The standard set forth could be problematic for market participants current practices. It also calls into question why a deal should be tethered to MMD, if the standard the IRS is setting forth requires an index of broad-based securities. Increased Transparency. The Securities and Exchange Commission s municipal advisor rule imposes a fiduciary duty on municipal advisors when involved in a bond pricing. MMD s role in the final cost of borrowing should be made clear in this context. For example, when bond prices change from retail to institutional order period, in many cases the change is simply driven by the MMD curve change not a thorough review of market factors or specifics of the particular deal/credit. Given the opaque process of the MMD curve, an issuer s fiduciary should reach an independent understanding of the situation so he or she can clearly explain why the cost of borrowing changed or how it was calculated to begin with. Having a greater understanding of the ins and outs of bond pricing will help finance officers gain a deeper knowledge of market influences and fluctuations that can result in more favorable negotiations when bonds are sold. That along with additional pricing information on EMMA, and having regulators look at incorporating true indexes into the municipal sector, would be beneficial to issuers and the municipal marketplace as a whole. 42 Government Finance Review August 2015
6 CONCLUSIONS Notes While access to the municipal bond market remains strong for most governments for now, the landscape will continue to evolve because of changing federal regulations and corresponding market practices. Finance officers should brace for an eventual rising-rate environment, along with the associated challenges. The problems being experienced by Puerto Rico and state and local governments that have pension funding concerns will not disappear if your credit is not subject to related problems, that is an important message to convey to investors. Additionally, expect rating agencies to continue to diverge in how they assess municipal credits and plan appropriately. Finally, pricing transparency will likely grow as a topic affecting issuers and investors. y Chicago s May 2015 credit rating downgrade to junk status, the result of the city s inability to create a viable pension funding plan, has already affected borrowing costs across the country. 1. Michael Corkery and Mary Williams Walsh, Puerto Rico s Governor Says Island s Debts Are Not Payable, New York Times, June 28, Understanding Municipal Market Indices, Yield Curves, and Benchmarks, Municipal Securities Rulemaking Board, September Issue Price Definition for Tax-Exempt Bonds, a proposed rule by the Internal Revenue Service, June 24, MATT POSNER is a managing director at Municipal Market Analytics, a Massachusetts-based independent data and research firm. Mr. Posner writes daily municipal market Insight reports and coordinates the firm s Washington D.C. initiatives. He also oversees the weekly MMA Municipal Issuer Brief, a report designed exclusively for the issuer community. To sign up, contact Posner.matthew@gmail.com. August 2015 Government Finance Review 43
High Yield Municipal Bond Outlook
INSIGHTS High Yield Municipal Bond Outlook 203.621.1700 2014, Rocaton Investment Advisors, LLC EXECUTIVE SUMMARY Uncertainty surrounding Federal Reserve interest rate policies and negative municipal headlines
More informationBond Market Insights October 10, 2014
Bond Market Insights October 10, 2014 by John Simms, CFA and Jerry Wiesner, CFA General Bond Market Treasury yields rose in September as prices fell. Yields in the belly of the curve (5- to 7-year maturities)
More informationParsing Puerto Rico. July 24, 2015 by Anthony Valeri of LPL Financial
Parsing Puerto Rico July 24, 2015 by Anthony Valeri of LPL Financial KEY TAKEAWAYS Puerto Rico s debt crisis remains isolated and not symptomatic of the broad municipal bond market. Signs of contagion
More informationWEST BASIN MUNICIPAL WATER DISTRICT Debt Management Policy Administrative Code Exhibit G January 2015
1.0 Purpose The purpose of this Debt Management Policy ( Policy ) is to establish parameters and provide guidance as to the issuance, management, continuing evaluation of and reporting on all debt obligations.
More informationPioneer AMT-Free Municipal Fund
Pioneer AMT-Free Municipal Fund COMMENTARY Performance Analysis & Commentary September 2015 Fund Ticker Symbols: PBMFX (Class A); PBYMX (Class Y) us.pioneerinvestments.com Third Quarter Review Pioneer
More informationSPDR Nuveen S&P High Yield Municipal Bond ETF
SPDR Nuveen S&P High Yield Municipal Bond ETF Summary Prospectus-October 31, 2015 HYMB (NYSE Ticker) Before you invest in the SPDR Nuveen S&P High Yield Municipal Bond ETF (the Fund ), you may want to
More informationPROFESSIONAL FIXED-INCOME MANAGEMENT
MARCH 2014 PROFESSIONAL FIXED-INCOME MANAGEMENT A Strategy for Changing Markets EXECUTIVE SUMMARY The bond market has evolved in the past 30 years and become increasingly complex and volatile. Many investors
More informationCalifornia Tax-Free Bond Fund
SUMMARY PROSPECTUS PRXCX July 1, 2015 T. Rowe Price California Tax-Free Bond Fund A longer-term bond fund seeking income exempt from federal and California state income taxes. Before you invest, you may
More informationGenTrust Wealth Management, LLC
[Type sidebar title] [Type the sidebar content. A sidebar is a standalone supplement to the main document. It is often aligned on the left or right of the page, or located at the top or bottom. Use While
More informationIndividual Bonds or Bond Funds?
Individual Bonds or Bond Funds? April 2014 When it comes to fixed income investing, advisors can choose between a variety of vehicles to implement bond portfolios. Many choose to construct ladders of individual
More informationMunicipal Bond Market Weekly
Fixed Income Strategy Municipal Bond Market Weekly Bottom Line: U.S Treasury yields fall for a second consecutive week on risk aversion to Brexit with lower real yields and lower inflation breakevens there
More informationBOND FUNDS L SHARES. October 1, 2004
BOND FUNDS A SHARES L SHARES October 1, 2004 CLASSIC INSTITUTIONAL U.S. GOVERNMENT SECURITIES SUPER SHORT INCOME PLUS FUND FLORIDA TAX-EXEMPT BOND FUND GEORGIA TAX-EXEMPT BOND FUND HIGH INCOME FUND INVESTMENT
More informationSection I. Introduction
Section I. Introduction Purpose and Overview In its publication entitled Best Practice Debt Management Policy, the Government Finance Officers Association (GFOA) states that Debt management policies are
More informationSmall Business Credit Outlook
2014 Q4 Small Business Credit Outlook The Growth Engine in 2015 Stock market volatility and GDP growth slowing to 2.6% lead many to believe the economy is stumbling. This problem can be attributed to a
More informationProcess of Municipal Bond Debt Issuance
Process of Municipal Bond Debt Issuance Public Financial Management, Inc. Asset Management LLC Advisors Public Financial Management, Inc. 221 W. 6 th St., Suite 1900 Austin, TX 78701 512.614.5325 5325
More informationUnderstanding Fixed Income
Understanding Fixed Income 2014 AMP Capital Investors Limited ABN 59 001 777 591 AFSL 232497 Understanding Fixed Income About fixed income at AMP Capital Our global presence helps us deliver outstanding
More informationHigh-yield bonds. Bonds that potentially reward investors for taking additional risk. High-yield bond basics
High-yield bonds Bonds that potentially reward investors for taking additional risk Types of high-yield bonds Types of high-yield bonds include: Cash-pay bonds. Known as plain vanilla bonds, these bonds
More informationRegulatory Guidance Regarding Changes in Fixed Income Market Conditions
Regulatory Guidance Regarding Changes in Fixed Income Market Conditions John V. O Hanlon Joshua Katz Dechert LLP Mutual Fund Directors Forum 2014 Policy Conference April 2-3, 2014 John V. O'Hanlon is a
More informationThe recent volatility of high-yield bonds: Spreads widen though fundamentals stay strong
Investment Insights The recent volatility of high-yield bonds: Spreads widen though fundamentals stay strong Kevin Lorenz, CFA, Managing Director, Lead Portfolio Manager of TIAA-CREF's High-Yield Fund
More informationUBS Municipal Trading and Portfolio Specialist Group. Understanding your options and opportunities in today s municipal bond marketplace.
ab UBS Municipal Trading and Portfolio Specialist Group Understanding your options and opportunities in today s municipal bond marketplace. The expertise you need to guide your municipal bond decisions.
More informationRussell Funds Russell Tax Exempt Bond Fund Money Manager and Russell Overview September 2015
Money Manager and Russell Overview September 2015 Russell s investment approach Russell uses a multi-asset approach to investing, combining asset allocation, manager selection and ongoing portfolio management
More informationUnderstanding Premium Bonds
Understanding Premium Bonds Many individual investors prefer to purchase individual bonds at prices around par value (100), or even at a discount to par. With interest rates hovering near historic lows,
More informationSmall Business Credit Outlook
2015 Q2 Small Business Credit Outlook A Change Will Do You Good Foreign markets falling. The U.S. economy holding up relatively well due to the consumer. Technology radically changing entire industries
More informationAn Attractive Income Option for a Strategic Allocation
An Attractive Income Option for a Strategic Allocation Voya Senior Loans Suite A strategic allocation provides potential for high and relatively steady income through most credit and rate cycles Improves
More informationHigh Yield Bonds A Primer
High Yield Bonds A Primer With our extensive history in the Canadian credit market dating back to the Income Trust period, our portfolio managers believe that there is considerable merit in including select
More informationMunicipal Bond Market Weekly
Strategy Municipal Bond Market Weekly Bottom Line: The U.S. Treasury yields rose sharply on a hawkishly-perceived interpretation of the FOMC meeting statement. Municipal yields hung on and the 10-yr AAA
More informationAlert June 2013. SEC Money Market Fund Reforms Could Significantly Affect Corporate Cash Management. Introduction. Background Stable Share Pricing
Alert June 2013 In This Alert: SEC Money Market Fund Reforms Could Significantly Affect Corporate Cash Management Introduction Background Stable Share Pricing The Lehman Collapse The SEC Proposals Floating
More informationThe buck stops here: Vanguard money market funds
The buck stops here: Vanguard money market funds Vanguard commentary September Executive summary. Money market funds play an important role for Vanguard clients, providing a high-quality and liquid investment
More informationEquity Investing Evolved Manage risk, stay invested
Equity Investing Evolved Manage risk, stay invested HSBC Buffered Strategies Are you on track to meet your retirement and investment goals? Have extreme market swings prevented you from investing? Would
More informationEvolving municipal bond market makes compelling case for active management
February 2012» Putnam Perspective Evolving municipal bond market makes compelling case for active management Thalia Meehan, CFA Portfolio Manager Paul M. Drury, CFA Portfolio Manager Susan A. McCormack,
More informationLONG ISLAND POWER AUTHORITY UTILITY DEBT SECURITIZATION AUTHORITY Debt Management Policy (as amended on March 26, 2015)
LONG ISLAND POWER AUTHORITY UTILITY DEBT SECURITIZATION AUTHORITY Debt Management Policy (as amended on March 26, 2015) I. Purpose of Debt Management Policy The debt management policy sets forth the parameters
More informationResults of the First Annual SBLF Lending Survey
Results of the First Annual SBLF Lending Survey June 2013 (Updated 11/1/2013) OVERVIEW Small businesses are a vital part of the American economy and their success is a critical component of the economic
More informationA strategic, multisector approach to fixed-income investing
Alternative Solutions Forward Credit Analysis Long/Short Fund A strategic, multisector approach to fixed-income investing Is it time to adapt your fixed-income approach? Today s fixed-income investors
More informationCity National Rochdale Municipal High Income Fund a series of City National Rochdale Funds
City National Rochdale Municipal High Income Fund a series of City National Rochdale Funds SUMMARY PROSPECTUS DATED JANUARY 31, 2016 Class: Servicing Class Class N Ticker: (CNRMX) (CNRNX) Before you invest,
More informationBond Fund of the TIAA-CREF Life Funds
Summary Prospectus MAY 1, 2015 Bond Fund of the TIAA-CREF Life Funds Ticker: TLBDX Before you invest, you may want to review the Fund s prospectus, which contains more information about the Fund and its
More informationWest Virginia Housing Development Fund. Debt Management Policy
West Virginia Housing Development Fund Debt Management Policy Approved March 21, 2013 Table of Contents Debt Management Policy... 1 Variable Rate Debt and Interest Rate Swap Management Plan... 5 Variable
More informationMainStay VP Janus Balanced Portfolio
Summary Prospectus May 1, 2015 MainStay VP Janus Balanced Portfolio To Statutory Prospectus To Statement of Additional Information Before you invest, you may want to review the Portfolio's Prospectus,
More informationMunicipal Market Review
Redstone Advisors Municipal Market Review Municipal yields rallied sharply during the quarter, with most of the decline in yields occurring in March. The predominant trends acting on municipal yields during
More informationUncommon Opportunity in the Municipal Bond Market. April 2009
Uncommon Opportunity in the Municipal Bond Market April 2009 Disclosures 2 Past performance does not guarantee future results. The performance data quoted represents past performance and current returns
More informationFederated New York Municipal Income Fund
Summary Prospectus October 31, 2015 Share Class A B Ticker NYIFX NYIBX Federated New York Municipal Income Fund A Portfolio of Federated Municipal Securities Income Trust Before you invest, you may want
More informationBond Mutual Funds. a guide to. A bond mutual fund is an investment company. that pools money from shareholders and invests
a guide to Bond Mutual Funds A bond mutual fund is an investment company that pools money from shareholders and invests primarily in a diversified portfolio of bonds. Table of Contents What Is a Bond?...
More informationRussell Funds Russell Tax Exempt High Yield Bond Fund Money Manager and Russell Overview November 2015
Russell Tax Exempt High Yield Bond Fund Money Manager and Russell Overview November 2015 Russell s investment approach Russell uses a multi-asset approach to investing, combining asset allocation, manager
More informationLong duration bond benchmarks for corporate pension plans
By: Yoshie Phillips, CFA, Senior Research Analyst OCTOBER 2011 Long duration bond benchmarks for corporate pension plans Issue: With the growth of liability-driven investing (LDI), many corporate pension
More informationAn Overview of the US Closed-End Fund Market. By Paul Mazzilli
An Overview of the US Closed-End Fund Market By Paul Mazzilli Introduction Closed-end funds (CEFs) are professionally managed investment companies that offer investors various unique benefits. They offer
More informationDEBT MANAGEMENT POLICY
Page 1 of 5 DEBT LIMITS Credit Ratings The school district seeks to maintain the highest possible credit ratings for all categories of short- and long-term debt that can be achieved without compromising
More informationFixed Income Investments. Private Banking USA
Fixed Income Investments Credit Suisse Securities (USA) llc Private Banking USA 2 Preservation of your wealth is our first priority. Introduction Fixed Income Investing Today In the last two decades, investors
More informationFixed Focusing on Income Capital Preservation Specialists and Income
Fixed Focusing on Income Capital Preservation Specialists and Income Charting a Safe Financial Course Firm Richter Bober Asset Management, LLC specializes in managing fixed income portfolios for individuals
More informationImpact of rising interest rates on preferred securities
Impact of rising interest rates on preferred securities This report looks at the risks preferred investors may face in a rising-interest-rate environment. We are currently in a period of historically low
More informationCity of Philadelphia Debt Management Policy December 2009
City of Philadelphia Debt Management Policy December 2009 I. INTRODUCTION While the issuance of debt is often an appropriate method of financing capital projects and major equipment acquisition, it needs
More informationMunicipal Bond Investing
Municipal Bond Investing A closer look at tax-exempt debt Intermediate Term AMT-Free National State Specific Contents 1 Municipal Bonds 101 Investing in America Through Municipal Bonds 2 Tax Advantages
More informationThe Empirical Approach to Interest Rate and Credit Risk in a Fixed Income Portfolio
www.empirical.net Seattle Portland Eugene Tacoma Anchorage March 27, 2013 The Empirical Approach to Interest Rate and Credit Risk in a Fixed Income Portfolio By Erik Lehr In recent weeks, market news about
More informationFLOATING RATE BANK LOANS: A BREAK FROM TRADITION FOR INCOME-SEEKING INVESTORS. Why does the bank loan sector remain so attractive?
FLOATING RATE BANK LOANS: A BREAK FROM TRADITION FOR INCOME-SEEKING INVESTORS Bank loans present a compelling income opportunity and a portfolio diversifier that provides protection against traditional
More informationUniversity of Washington Debt Management Annual Report
VII. STANDING COMMITTEES F 9 B. Finance and Asset Management Committee Debt Management Annual Report INFORMATION The Board of Regents is charged with adopting the University s Debt Management Policy, establishing
More informationWhy Use A MortgAge BAnker?
Why Use A Mortgage Banker? US Mortgage Corporation (NMLS ID#3901). Corporate Office is located at 201 Old Country Road, Suite 140, Melville, NY 11747; 631-580-2600 or (800) 562-6715 (LOANS15). Licensed
More informationUnderstanding Leverage in Closed-End Funds
Closed-End Funds Understanding Leverage in Closed-End Funds The concept of leverage seems simple: borrowing money at a low cost and using it to seek higher returns on an investment. Leverage as it applies
More informationAn Alternative to Fixed Rate Bonds
An Alternative to Fixed Rate Bonds Voya Senior Loans Suite offered by Aston Hill Financial Seeks to pay high income in various rate environments One of the world s largest dedicated senior loan teams Five
More informationWhy high-yield municipal bonds may be attractive in today s market environment
Spread Why high-yield municipal bonds may be attractive in today s market environment February 2014 High-yield municipal bonds may be attractive given their: Historically wide spreads Attractive prices
More informationMismanagement of Municipal Debt Puts a Hole in Everybody s Pocket
Mismanagement of Municipal Debt Puts a Hole in Everybody s Pocket August 8, 2012 61 Broadway New York, NY 10006 212.482.0900 www.kalotay.com Bird s Eye View of Municipal Finance Significant segment of
More informationMUNICIPAL BONDS EXECUTIVE SUMMARY
Nationwide Funds A Nationwide Financial White Paper EXECUTIVE SUMMARY Municipal bonds have several attractive characteristics, including tax advantages, low volatility and strong credit quality. Challenges
More informationClosed-End Funds. A closed-end fund is a type of investment company. whose shares are listed on a stock exchange
a guide to Closed-End Funds A closed-end fund is a type of investment company whose shares are listed on a stock exchange or are traded in the over-the-counter market. Contents What Is a Closed-End Fund?...2
More informationThe Case for a Custom Fixed Income Benchmark. ssga.com/definedcontribution REFINING THE AGG
The Case for a Custom Fixed Income Benchmark ssga.com/definedcontribution REFINING THE AGG For decades, the Barclays US Aggregate Index (the Agg ) has been a popular benchmark for core bond investment
More informationSenior Floating Rate Loans
Senior floating rate loans have become a staple of the U.S. debt market and have grown from a market value of $126 billion in 2001 to $607 billion as of year-end 2011. 1 For over 20 years, managed senior
More informationFixed Income ETFs: Navigating Today s Trading Environment
Fixed Income ETFs: Navigating Today s Trading Environment Karen Schenone, CFA Vice President, ishares Fixed Income Strategy Khoabane Phoofolo Vice President, ishares Capital Markets Today s Speakers Karen
More informationGlobal high yield: We believe it s still offering value December 2013
Global high yield: We believe it s still offering value December 2013 02 of 08 Global high yield: we believe it s still offering value Patrick Maldari, CFA Senior Portfolio Manager North American Fixed
More informationManaging Corporate Pension Plan Financial Risk
Managing Corporate Pension Plan Financial Risk A Better Approach to Liability Driven Investing Executive Summary Sponsors of fully funded corporate pension plans should consider a Liability Driven Investing
More informationFLOATING RATE BANK LOANS: A BREAK FROM TRADITION FOR INCOME-SEEKING INVESTORS
FLOATING RATE BANK LOANS: A BREAK FROM TRADITION FOR INCOME-SEEKING INVESTORS With about $713 billion in assets, the bank loan market is roughly half the size of the high yield market. However, demand
More informationNEW YORK STATE DIVISION OF THE BUDGET DEBT MANAGEMENT POLICIES STATE-SUPPORTED DEBT
NEW YORK STATE DIVISION OF THE BUDGET DEBT MANAGEMENT POLICIES STATE-SUPPORTED DEBT LAST REVISED: October 2012 Introduction: The following provides a summary of the State s Debt Management Policies and
More informationWest Virginia Housing Development Fund. Debt Management Policy
West Virginia Housing Development Fund Debt Management Policy Approved March 8, 2011 Table of Contents Debt Management Policy... 1 Variable Rate Debt and Interest Rate Swap Management Plan... 5 Variable
More informationRussell Funds Russell Commodity Strategies Fund Money Manager and Russell Investments Overview June 2016. Russell Investments approach
Money Manager and Russell Investments Overview June 206 Russell Investments approach Russell Investments uses a multi-asset approach to investing, combining asset allocation, manager selection and ongoing
More informationFixed Income Review. Second Quarter 2015
Second Quarter 2015 As of June 30, 2015 Total Return Performance Calendar Year Performance Index MTD QTD YTD 2014 2013 2012 Barclays US Aggregate -1.1% -1.7% -0.1% 6.0% -2.0% 4.2% BAML US Agency Index
More informationT. Rowe Price Target Retirement 2030 Fund Advisor Class
T. Rowe Price Target Retirement 2030 Fund Advisor Class Supplement to Summary Prospectus Dated October 1, 2015 Effective February 1, 2016, the T. Rowe Price Mid-Cap Index Fund and the T. Rowe Price Small-Cap
More informationWhen To Refinance. Your Mortgage
When To Refinance Your Mortgage US Mortgage Corporation (NMLS ID#3901). Corporate Office is located at 201 Old Country Road, Suite 140, Melville, NY 11747; 631-580-2600 or (800) 562-6715 (LOANS15). Licensed
More informationBERYL Credit Pulse on High Yield Corporates
BERYL Credit Pulse on High Yield Corporates This paper will summarize Beryl Consulting 2010 outlook and hedge fund portfolio construction for the high yield corporate sector in light of the events of the
More informationCUTTING THROUGH THE NOISE:
CUTTING THROUGH THE NOISE: MUNICIPAL FINANCE & EXEMPTION: 2013 Thomas G. Doe, Founder and CEO February 23, 2013 MMA Page 1 www. mma research.com Municipal bonds should not be thought of as a security to
More informationGeneral. Scope. Objectives. The objective of the Policy is to ensure prudent debt management practices that include:
General This Policy (the Policy ) establishes conditions for the use of debt and creates procedures and policies designed to manage the Alamo Community College District s (the College District ) obligations
More informationHow To Invest In High Yield Bonds
Investment Perspectives For high-yield bonds, market volatility can bring new opportunities Kevin Lorenz and Jean Lin, portfolio managers for TIAA-CREF High-Yield Fund Article Highlights: The decline in
More informationState and Local Sales Tax Revenue Losses from E-Commerce: Updated Estimates
State and Local Sales Tax Revenue Losses from E-Commerce: Updated Estimates by Donald Bruce, Assistant Professor dbruce@utk.edu and William F. Fox, Professor billfox@utk.edu Center for Business and Economic
More informationRising Interest Rates and Municipal Bond Performance
Rising Interest Rates and Municipal Performance September 2013 INTRODUCTION Adam Mackey Managing Director Municipal Fixed Income Fixed income investors are justifiably anxious about recent increases in
More informationYield Curve September 2004
Yield Curve Basics The yield curve, a graph that depicts the relationship between bond yields and maturities, is an important tool in fixed-income investing. Investors use the yield curve as a reference
More informationBond Fund Investing in a Rising Rate Environment
MUTUAL FUND RESEARCH Danette Szakaly Ext. 71937 Date Issued: 1/14/11 Fund Investing in a Rising Rate Environment The recent rise in U.S. Treasury bond yields has some investors wondering how to manage
More informationA guide to investing in cash alternatives
A guide to investing in cash alternatives What you should know before you buy Wells Fargo Advisors wants to help you invest in cash alternative products that are suitable for you based on your investment
More informationResponse to European Commission Consultation Document on Undertakings for Collective Investment in Transferable Securities ( UCITS )
Association for Financial Markets in Europe Response to European Commission Consultation Document on Undertakings for Collective Investment in Transferable Securities ( UCITS ) 24 October 2012 The Association
More informationWhat Investors Should Know about Money Market Reforms
What Investors Should Know about Money Market Reforms What Investors Should Know about Money Market Reforms Executive Summary Ò New SEC regulations for the $2.7 trillion money market industry may present
More informationIs it time to hire a professional to manage your bonds?
Is it time to hire a professional to manage your bonds? Today s bond markets are more complex Finding the right bonds can be difficult. The bond markets are large and complex, and it takes a lot of homework
More informationTennessee Housing Development Agency Debt Management Policy Approved November 29, 2011, amended July 29, 2014
Tennessee Housing Development Agency Debt Management Policy Approved November 29, 2011, amended July 29, 2014 I. Background The Tennessee Housing Development Agency ( THDA ) is a body, politic and corporate,
More informationBlackRock Diversified Income Portfolio. A portfolio from Fidelity Investments designed to seek income while managing risk
BlackRock Diversified Income Portfolio A portfolio from Fidelity Investments designed to seek income while managing risk Fidelity Investments has formed a strategic alliance with BlackRock Investment Management,
More informationBond Market Perspectives
LPL FINANCIAL RESEARCH Bond Market Perspectives March 26, 2013 High-Yield Bonds and the Credit Cycle Anthony Valeri, CFA Market Strategist LPL Financial Highlights More speculative issuance has increased
More informationBalanced Fund RPBAX. T. Rowe Price SUMMARY PROSPECTUS
SUMMARY PROSPECTUS RPBAX May 1, 2016 T. Rowe Price Balanced Fund A fund seeking capital growth and current income through a portfolio of approximately 65% stocks and 35% fixed income securities. Before
More informationRemarks of Lynnette Kelly, Executive Director. to the. Washington University Global Masters of. Finance/ Singapore Management University
Remarks of Lynnette Kelly, Executive Director to the Washington University Global Masters of Finance/ Singapore Management University Brookings Institution - Washington, DC May 22, 2015 INTRODUCTION Good
More informationBonds, in the most generic sense, are issued with three essential components.
Page 1 of 5 Bond Basics Often considered to be one of the most conservative of all investments, bonds actually provide benefits to both conservative and more aggressive investors alike. The variety of
More informationWST ASSET MANAGER U.S. EQUITY FUND
Prospectus December 18, 2015 WST ASSET MANAGER U.S. EQUITY FUND Investor Shares (Ticker Symbol: WSTEX) Institutional Shares (Ticker Symbol: WSTIX) WST ASSET MANAGER U.S. BOND FUND Investor Shares (Ticker
More informationMunis: Still Delivering in Tough Conditions? July 2014
Munis: Still Delivering in Tough Conditions? July 2014 Columbia Management s James Dearborn finds plenty of opportunity in munis today Over the past year, James Dearborn says, a challenging part of his
More informationSEC Requests for Comment on Money Market Fund Reform Proposal
Skadden Skadden, Arps, Slate, Meagher & Flom LLP & Affiliates SEC Requests for Comment on Money Market Fund Reform Proposal Comment requests that may be of particular interest to issuers of short-term
More informationHigh Risk Jurisdiction Severity Trends, Time to Closure & Obstetric Claims Trends
High Risk Jurisdiction Severity Trends, Time to Closure & Obstetric Claims Trends Analysis and Findings Provided by Beazley Group Excerpt taken from: Aon/ASHRM Hospital and Physician Professional Liability
More informationFinancial Markets and Institutions Abridged 10 th Edition
Financial Markets and Institutions Abridged 10 th Edition by Jeff Madura 1 23 Mutual Fund Operations Chapter Objectives provide a background on mutual funds describe the various types of stock and bond
More informationClass / Ticker Symbol Fund Name Class A Class C Class C1 Class I
Mutual Funds Prospectus August 31, 2011 Nuveen Municipal Bond Funds Dependable, tax-free income because it s not what you earn, it s what you keep. Class / Ticker Symbol Fund Name Class A Class C Class
More informationProspectus Baird Funds
Prospectus Baird Funds May 1, 2014 Baird Ultra Short Bond Fund (Institutional Class: BUBIX) (Investor Class: BUBSX) Baird Short-Term Bond Fund (Institutional Class: BSBIX) (Investor Class: BSBSX) Baird
More informationMecklenburg County, North Carolina Debt Policy
Mecklenburg County, North Carolina Debt Policy Introduction Mecklenburg County recognizes that one of the keys to sound financial management is a debt policy. These benefits are recognized by bond rating
More informationImportant Information about Closed-End Funds and Unit Investment Trusts
Robert W. Baird & Co. Incorporated Important Information about Closed-End Funds and Unit Investment Trusts Baird has prepared this document to help you understand the characteristics and risks associated
More informationJohn Hancock Bond Trust. John Hancock Focused High Yield Fund (the fund )
John Hancock Bond Trust John Hancock Focused High Yield Fund (the fund ) Supplement dated June 24, 2016 to the current Summary Prospectus, as may be supplemented The following information supplements and
More information