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.
June 28, 2012
Let's please resist the temptation to feel smug about Stockton. California's great inland river-port city and Central Valley agricultural hub filed for Chapter 9 bankruptcy protection Wednesday after a series of bad bets and a run of bad luck. No doubt observers in other cities and states, and from various spots in the political spectrum, will be ready with pointing fingers and easy ideologically-based explanations: It was greedy public workers and their unions who brought us to this point.