| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
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1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Wall Street Pounces on Distressed Muni Deals
Investors grab control of city properties with "loan to own" deals |
Bloomberg Businessweek - March 10, 2011 - By Jonathan Keehner, Martin Z. Braun and Jeffrey McCracken
As conditions in the corporate bond market improve—limiting potential gains for bottom-fishing investors—private equity firms and Wall Street banks are seizing opportunities in the $28 billion market for distressed municipal bonds. The investors are using a strategy borrowed from the corporate bond world known as "loan to own," which involves buying debt to gain control of revenue-producing municipal projects.
Citigroup (C) took over St. Louis's Renaissance Grand Hotel & Suites in December when it purchased revenue bonds backed by the 1,000-room hotel after lenders foreclosed. Fundamental Advisors, a New York private equity firm, took control of the Memphis Redbirds minor league baseball franchise and the team's AutoZone Park after buying its tax-exempt debt.
The bonds, some of which changed hands for 53 cents on the dollar, may herald a new outlet for investors in distressed debt. "Assets such as highways, water treatment plants, sports stadiums, racetracks, parking facilities, or parks may be very attractive," says Deryck Palmer, co-chairman of financial restructuring at law firm Cadwalader, Wickersham & Taft in New York.
Investment firms including Goldman Sachs (GS) have discussed raising funds with investors that would target assets backed by distressed revenue bonds, according to people familiar with the talks. Ultimately, the goal is to profit by selling the properties when market conditions improve.
The St. Louis purchase gave Citigroup control of the trustee that oversees the hotel after the bank bought a majority stake in $98 million of revenue bonds backed by Renaissance from Nuveen Asset Management, according to two people with knowledge of the deal who asked not to be identified. "Our goal is to reach the best outcome for the bondholders and for St. Louis," Citigroup spokesman Alexander Samuelson says.
The default rate on speculative-grade corporate debt—also known as leveraged loans—has fallen as the U.S. economy has strengthened, sending prices of those bonds higher. That means investors no longer expect such loans to produce the strong returns posted over the past few years, according to Debtwire's North American Distressed Debt Market Outlook 2011.
In the muni bond market, defaults totaled $18.6 billion from 2008 to 2010, exceeding the previous eight years' combined total of $15.3 billion, according to Richard Lehmann, publisher of Distressed Debt Securities Newsletter. The issuing of revenue bonds, which are backed by specific projects such as a toll road, a bridge, or a hotel, peaked in 2007 at $317 billion, more than double the amount in 2000, according to data compiled by Bloomberg. These bonds make up 80 percent of the municipal market's distressed securities, or $22.3 billion, according to Bloomberg data.
For the complete article.
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