March 11, 2013 |
The Securities and Exchange Commission charged Illinois with securities fraud, accusing the state of misleading municipal investors over pension fund obligations, the regulatory agency said Monday. An investigation determined the state failed to inform investors about the impact of problems with its pension funding schedule, the agency said. Between 2005 and 2009, Illinois sold more than $2.2 billion in municipal bonds but neglected to tell investors that pension obligations were underfunded, the agency said.
August 24, 2012 |
California Treasurer Bill Lockyer has asked the state attorney general to investigate whether conflict-of-interest laws were broken at one of the state's biggest issuers of municipal debt. Lockyer's request follows the release of a report by the State Audits Bureau that said the compensation arrangements at the California Statewide Communities Development Authority raise concerns about possible violations of the Political Reform Act. The law prohibits public officials from making, participating in or influencing decisions that affect them financially.
August 21, 2012 |
Warren Buffett may have doubts about municipal bonds, those boring tax-exempt investments that governments need to finance their operations and projects. The Wall Street Journal reported Tuesday that the famed investor's Berkshire Hathaway Inc. recently wound down a large bet on muni bonds. The decision to end credit-default swaps insuring $8.25 billion in bonds is seen as a sign "that one of the world's savviest investors has doubts about the state of municipal finances," the Journal reported.
July 31, 2012 |
The U.S. Securities and Exchange Commission wants investors to know more about bonds issued by cities, states and other entities. In a 150-page report issued Tuesday the SEC recommended a host of legal, regulatory and industry changes that would shed more light on the $3.7-million market used to finance roads and schools as well as hospitals and private development projects. Municipalities often fail to continue disclosing their financial conditions after issuing bonds to finance projects.
July 15, 2012 |
San Bernardino is going bankrupt. Stockton is defaulting on its debt. And other cities are grappling with similar financial strains. That wouldn't seem to be a good environment for municipal bond mutual funds, but they keep rallying anyway. The average long-term California muni fund notched a total return of 2.5% in the second quarter, according to fund trackerMorningstar Inc.Muni bonds in the state are up 6% so far this year and 13.4% over the last 12 months. Total return includes interest payments and appreciation in the value of the underlying bonds.
July 12, 2012 |
The declining number of U.S. smokers is proving hazardous to the health of municipal bonds backed by payments from cigarette companies under a 1998 settlement with 46 U.S. states, Moody's Investors Service said. The rating company projected that almost three-quarters of the $20.4 billion in tobacco bonds it grades will default if cigarette consumption declines 3% to 4% annually. Tobacco bonds that have a high ratio of outstanding debt to annual payments from the companies, long maturities and low cash reserves are vulnerable to lower smoking rates, Moody's said today in a report.