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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
|
3.00% |
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S&P California Bond Index
|
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
|
848.03 |
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S&P U.S. Preferred Stock Index (CAD)
|
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)
|
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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Municipal Bonds: Was Meredith Whitney Right? |
moneywatch.com - May 11, 2011 - by Larry Swedroe
(To see why investors in the highest-grade municipal bonds shouldn’t be as concerned about municipal bond defaults, see the post “Municipal Bonds: Why We Likely Won’t See Armageddon.”)
Meredith Whitney caused quite a stir in December when she predicted “between 50 and 100 ’significant’ municipal bond defaults in 2011, totaling ‘hundreds of billions’ of dollars.” So far, Whitney has been pretty far off the mark, and it seems to have had a large and unnecessary impact on investor behavior.
Her comments were among the triggers that caused investors to withdraw money from municipal bond funds for 24 consecutive weeks. Given the huge amount of outflows that might have been triggered by Whitney’s forecast, I thought it would be worthwhile doing a check on how her forecast has turned out. As George Spritzer of Seeking Alpha noted, we should be seeing more than $4 billion of municipal bond defaults per week, according to Whitney. Yet, municipal bond defaults actually declined dramatically in the first quarter of 2011 compared with last year. Only nine small issues have failed, totaling $0.25 billion compared to about $1 billion last year, and none of the nine issues had an S&P rating.
It’s also important to remember that defaults don’t necessarily turn into losses for municipal bond holders, as recovery rates are much higher than they are for corporate bonds. Consider the Vallejo, Calif. bond default. It appears likely that the bond holders likely won’t experience any loss of principal. And recall that in the case of two famous defaults, New York City and Orange County, bond holders were made whole.
The massive scale of problems that Ms. Whitney had anticipated haven’t (so far) appeared because governments have taken actions to address the problem, cutting spending and raising revenues. Unlike the federal government, all states except one are required to balance their budgets. As a result, budget gaps are being closed by layoffs of public employees, greatly reduced services and increased taxes and fees.
For the complete article.
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| Stuff to look at |
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Income Security Recommendation January 2013 Issue.
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