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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
|
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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Municipal Debt: Did My Bonds Go Down The Sewer? |
Seeking Alpha - Nov. 21, 2011 - Matt Tucker
Earlier this month, Jefferson County, Alabama, became the largest issuer in the municipal bond market to file for bankruptcy. Back in 1997 the county tried to upgrade its sewer system. Through losses on interest rate swaps and fraud, the debt burden from the sewer project rose from $555 million to more than $2.2 billion. After spending years trying to find a way out of the mess, the county finally filed for bankruptcy on November 9.
Jefferson’s filing has raised a number of questions among investors, including what will happen to Jefferson County’s debt?
Well, Jefferson Country has a few different types of debt in the market including $200 million of general obligation bonds, $3.1 billion of revenue bonds tied to the sewer system and $930 million in other bonds, like school bonds. These bonds will be restructured as a part of the bankruptcy process.
The revenue bonds tied to the sewer system were downgraded to junk status in February 2008, so they were already trading at distressed levels. It’s still too early to tell what holders of these bonds might be paid, however we can look at where these bonds are currently trading to get an idea where market participants are estimating their value. Let’s look at a Jefferson County bond that matures in 2016 with a 5.25% coupon. At November 17’s price of $80, the market expects a recovery rate of around 80 cents per dollar of par value.
Jefferson County also has some debt that is escrowed and fully backed by U.S. Treasuries. These bonds did not get downgraded with the rest of the debt in 2008 and they currently carry a AAA-rating by Moody’s, which is in-line with the Moody’s U.S. Treasury rating. These bonds do not carry credit risk as there are Treasuries held in account that will be used to repay bondholders. However, due to the headline risk surrounding Jefferson Country even these bonds have experienced price declines.
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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