December 31, 2011 |
A Beverly Hills financial firm and its founder pleaded guilty to federal criminal charges that they defrauded government agencies by steering investment contracts to firms that paid them kickbacks. David Rubin, 50, and his company, CDR Financial Products Inc., were accused of running sham auctions for government agencies looking to invest money raised through municipal bond offerings. The contracts were awarded to favored firms that secretly paid kickbacks to CDR, not always the firm offering the highest returns, the government alleged.
August 25, 2011 |
California legislators voted to open an official inquiry into two state agencies that channel money earned from issuing municipal bonds to private companies. Assemblyman Mike Feuer (D-Los Angeles) in May requested the audit of the California Statewide Communities Development Authority (CSCDA) and the California Municipal Financial Authority (CMFA). The Joint Legislative Audit Committee approved the request on an 8-3 vote Wednesday and will now conduct a full review of both agencies.
June 14, 2011 |
An often-ignored corner of the municipal bond market is causing outsize troubles for investors. A spate of municipal bond defaults in recent months has included a $43-million issue that went to pay for a Hampton Inn in Boston, and $15 million in bonds that funded a commercial cargo facility at an Alaska airport. These are not traditional municipal bonds used to finance sewers and schools. These debts are a form of financing known as conduit bonds. Conduits allow private entities to tap into low-cost municipal bond financing for projects that boost economic development.
May 31, 2011 |
The tax-free municipal bond market suffered a brutal sell-off last fall and winter, driving interest rates up to two-year highs amid deepening worries about state and local governments' finances. But munis have rallied in recent months, pushing rates down and bond prices up, as investors' concerns have eased. The rally has recouped half or more of the market's decline from its late-summer peaks. Now what? Peter Hayes, who oversees $102 billion in muni bonds at money management giant BlackRock Inc. in New York, talked with Times staff writer Tom Petruno about the muni market's outlook.
May 25, 2011 |
Stephen Hamill and Gerald Burke do jobs normally reserved for public employees. They just make a lot more money doing it. The former Alameda County public servants have made tens of millions of dollars for their private company by coming up with a novel method of issuing tax-free municipal bonds. By law, these bonds must be issued by government agencies to finance projects with a public benefit, such as highways and hospitals. Hamill and Burke have harnessed this process for profit by working with a little-known public agency they helped to create called the California Statewide Communities Development Authority.
May 20, 2011 |
The bleeding finally has stopped: Municipal bond mutual funds took in a net $38 million in new cash from investors last week, the first inflow since November, new data show. The turnaround for the muni fund industry follows six straight weeks of rising bond values and falling interest rates, as the $2.9-trillion tax-free muni market has rebounded after a wave of selling late last year and early this year. The return to cash inflows suggests that many investors are buying only because the market is rallying; they passed up the chance to buy at higher yields earlier this year because the risks seemed too great at the time.
CALIFORNIA | LOCAL
May 6, 2011 |
Some of Montebello's municipal bonds have been downgraded to junk status, another blow to a city already teetering on the edge of insolvency. The interim city administrator has predicted that the general fund will run out of cash if the city does not secure a loan by the end of September. The move by Moody's, a major credit rating agency, will make it more difficult for Montebello to get a loan, experts told city officials. Moody's downgraded its rating of the city's 2000 series certificates of participation by two notches to Ba1, meaning that the general fund's long-term obligations are no longer viewed as investment grade.
February 4, 2011 |
The municipal bond market's recent rally has run out of steam this week, as some potential buyers apparently don't see current tax-free yields as high enough to compensate for the risks. The annualized tax-free yield on the Bond Buyer newspaper's index of 40 long-term muni issues nationwide rose to 5.76% on Thursday, up from 5.73% on Wednesday and 5.71% on Tuesday. Until this week the yield had been sliding since Jan. 18, when it reached a two-year high of 5.95%. It's not helping the muni market this week that U.S. Treasury bond yields have been rising, reacting in part to strong economic data.
January 30, 2011 |
Worries about out-of-control state deficits, underfunded municipal pension plans and rising interest rates have been kicking the teeth out of the municipal bond market lately, with prices plunging and yields soaring. And that's got some contrarians saying that now may be the time to jump into the market. "This is a great time to get into munis for anyone looking for income in their portfolio," said Mark R. DeMitry, senior portfolio manager at the Oppenheimer Funds. "If you have a long-term horizon and can withstand the ups and downs of the market, it seems like there's a great opportunity.
December 24, 2010 |
Star banking analyst Meredith Whitney has been saying for months that the next phase of the housing meltdown would be a local-government financial crisis. This week she put a number on it, asserting that "hundreds of billions of dollars" of municipal bond debt would end up in default. Given the pounding that the tax-free muni market has taken since late October, driving bond prices down and yields up, Whitney's comments on CBS' "60 Minutes" were a bond salesman's worst nightmare.