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| 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
|
3.13% |
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S&P National 0-5 Year Municipal Bond Index
|
0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| More |
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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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S&P’s Inconvenient Truth About Municipal Bonds |
Forbes.com - March 15, 2011 - by RICHARD LEHMANN
It is hard to pick up a financial publication today without reading scary headlines about hundreds of billions of dollars of coming municipal bond defaults forecast by people who never had a thought about this market just six months ago. The problem seems that the media is looking for scare stories and doesn’t much care whether they are realistic or whether they do more harm than good.
Today’s financial markets work more off perception than reality so a good scare story that can’t be proven wrong gains more traction than a realistic appraisal of the situation by people in the know.
An unfortunate side effect of this perception change is the reaction by the credit rating agencies. They have been caught in the embarrassing position of just recently upgrading muni bonds across the board on the premise that the federal government would not let state governments fail and that state governments would not let city and county governments fail. Recent events seem to have made them rethink this decision.
Specifically, Standard & Po0rs has issued new guidelines for evaluating bond insurers that they plan to implement in the near future. They are currently soliciting comments before moving ahead. The guidelines make the evaluation process almost a purely subjective exercise that allows the rating agency to make pretty much any call they wish. In my view S&P misconstrues data reaching back to the Great Depression to arrive at the basis for determining capital adequacy and then go through a questionable exercise to arrive at their conclusion.
In my comments to S&P I point out the similarity of their evaluation logic to how we got to our conclusions on global warming, i.e. a solution in search of a problem. It’s as if S&P is taking an Al Gore Inconvenient Truth approach to the municipal bond crisis. If implemented, the S&P downgrade of Assured Guaranty would lead to the demise of the municipal bond insurance business as we know it.
For the complete article.
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Income Security Recommendation January 2013 Issue.
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