|
|
|
|
| BondsOnline.com: instant access to and extensive coverage of over 3.5 million stocks, bonds, indexes and other securities covering major and emerging markets and exchanges across the globe. |
|
|
| Bonds Online |
|
|
| 5/10/2013Market Performance |
| Municipal Bonds |
|---|
|
S&P National Bond Index
|
3.00% |
|
|
S&P California Bond Index
|
2.96% |
|
|
S&P New York Bond Index
|
3.13% |
|
|
S&P National 0-5 Year Municipal Bond Index
|
0.70% |
|
|
| S&P/BGCantor US Treasury Bond |
400.09 |
|
| More |
|
| Income Equities: |
|---|
| Preferred Stocks |
|---|
|
S&P U.S. Preferred Stock Index
|
848.03 |
|
|
S&P U.S. Preferred Stock Index (CAD)
|
636.26 |
|
|
S&P U.S. Preferred Stock Index (TR)
|
1,701.05 |
|
|
S&P U.S. Preferred Stock Index (TR) (CAD)
|
1,276.26 |
|
|
| REITs |
|---|
|
S&P REIT Index
|
174.07 |
|
|
S&P REIT Index (TR)
|
425.30 |
|
|
| MLPs |
|---|
|
S&P MLP Index
|
2,469.58 |
|
|
S&P MLP Index (TR)
|
5,428.50 |
|
|
See Data
|
|
|
|
 |
|
|
|
|
|
|
Municipal Revenue Bonds Under Attack In Federal Court |
Seeking Alpha - Nov. 29, 2011 - By Carl Dincesen
Jefferson County, Alabama’s widely reported filing for bankruptcy protection is the largest ever filed by a U.S. municipality.
This action, threatened for almost two years, became reality when a refinancing deal at about 66% on the dollar collapsed. The system can generate only about half of the amount necessary to pay debt service. The filing also includes about $1 billion in County general obligations, a near record.
By way of background, the majority of bondholders were also underwriters of the bonds. They have been fined hundreds of millions of dollars for violations of law in connection with the financing. Former County officials accepted bribes and kickbacks and were sentenced to jail.
Municipal bond investors should keep a close eye on the Federal District Court handling the case. What’s at stake is whether revenue bond default is handled by federal bankruptcy courts. State courts have exclusively administered those settlements since the Nation’s founding.
To date no federal court of any kind has ruled over the settlement of debt secured by a lien on state or local government revenue specifically pledged in repayment of publically sold bonds.
Revenue bond defaults are much more frequent than are general obligation bond defaults which themselves usually not settled through municipal bankruptcy.
By accepting the case, the Federal Court would greatly expand the scope of bankruptcy protection to include enterprise debt of municipalities. For the first time including municipal revenue bonds issued to build essential service infrastructure without the use of tax dollars. I would have to assume that a default on bonds secured by an exclusive lien on a dedicated tax would also be protected.
Local governments in the U.S. are generally prohibited from pledging public property to secure repayments of debt. Instead, they grant a security interest, a lien on operating revenue to borrow money that is repaid by means other than general taxation.
When a municipal utility, airport or toll road defaults, the parties eventually agree to terms based on the bond documents, state law, and most heavily the economic reality of the situation. Both parties want a settlement. Somehow, Jefferson County has apparently fooled a Federal Judge into letting secured revenue bond debt into its warmer, more comfortable waters. Of course, a price will be paid if this stays the case.
From the investor’s point of view, this looks like a new wildcard that would needlessly add risk where there was none, however little solace that may be for the owners of heavily over capitalized revenue bonds. For issuers it would increase borrowing costs because secured creditors will want more for taking the added risk.
For the complete article.
|
|
|
|
|
|
| Partner Market Place |
|
|
|
| Stuff to look at |
Yield and Income Newsletter: A must have for income investors. subscribe NOW
S&P Commentary and Newsletters: S&P
|
|
| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
Keep up with monthly, in-depth coverage of fixed income market strategies, commentary, and insights as seen by our sources. Sign up for the free BondsOnline Advisor now!
Unsubscribe here [+] |
|
|
|
|
|
|
|
|
