Actuarial Outpost
 
Go Back   Actuarial Outpost > Actuarial Discussion Forum > Finance - Investments
FlashChat Actuarial Discussion Preliminary Exams CAS/SOA Exams Cyberchat Around the World Suggestions

2017 ACTUARIAL SALARY SURVEYS
Contact DW Simpson for a Personalized Salary Survey

Finance - Investments Sub-forum: Non-Actuarial Personal Finance/Investing

Reply
 
Thread Tools Search this Thread Display Modes
  #31  
Old 02-18-2011, 04:30 PM
silverfox's Avatar
silverfox silverfox is offline
Member
CAS SOA COPA
 
Join Date: May 2005
Favorite beer: Westmalle Tripel
Posts: 14,864
Default

Interestingly, political subdivisions also don't have statutes governing their funding requirements for self-insurance. They get their actuarial study done and fund at a certain percentile of losses based on their study. A lot of them used to fund at a 70-80th percentile confidence, but that number's creeping down due to budget concerns. The city also decides what the discount rate should be. I've seen some cities using what I would consider a hefty discount rate and funding at the 50th percentile, which is below the expected losses. Actuarial study usually says they recommend funding at a higher confidence level.
Reply With Quote
  #32  
Old 02-23-2011, 08:41 PM
campbell's Avatar
campbell campbell is offline
Mary Pat Campbell
SOA AAA
 
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 85,022
Blog Entries: 6
Default

http://online.wsj.com/article/BT-CO-...22-713799.html
Quote:
The cash-strapped state of Illinois will likely offer juicy yields to entice buyers of a $3.7 billion taxable pension bond, which is expected to sell Wednesday in the municipal bond market.

According to a term sheet, initial price talk for the longest maturity in the offering, in 2019, is around 245 basis points over comparable Treasurys, giving the Illinois bond a yield of about 5.92%.

That's around 184 basis points, or 1.84 percentage point, more than comparably rated nine-year debt from cigarette maker Philip Morris International Inc. (PM), which is trading at 61 basis points over Treasurys, yielding about 4.08%.
__________________
It's STUMP

LinkedIn Profile
Reply With Quote
  #33  
Old 02-23-2011, 08:59 PM
campbell's Avatar
campbell campbell is offline
Mary Pat Campbell
SOA AAA
 
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 85,022
Blog Entries: 6
Default

http://newssun.suntimes.com/business...e-of-guts.html

Quote:
Meanwhile, Illinois Speaker of the House Michael “Mad Mike” Madigan and Gov. Pat Quinn, Mad Mike’s puppet, have proposed a $15 billion revenue bond to cover the 2011 deficit. Well, some of the wallahs on the Street claim that the State could miss a few payments on its municipal bonds.

But that won’t cut the mustard or slice the pork because the state’s pension plan is underfunded by $130 billion (Northwestern University Kellogg Graduate School of Management) and still assumes an 8 percent rate of return on its expensively managed pension investments.

Many observers doubt there are enough members in the legislature who are willing to restore sanity to the state’s budget. Only four other states have more municipal debt than Illinois, and the costs to insure Illinois bonds against default exceeds the cost to insure Afghanistan’s bonds.

Yet would you believe that Moody’s still gives Illinois double A and triple A rating, even though the state has the highest perceived default risk of any of the 50 states plus Puerto Rico? As a result, some long-term, 25-year Illinois municipal bonds yield over 8 percent, and some short-term municipals, three to five years, yield 5.5 percent, and mind you, those yields are tax-free.

So if you look into www.municipalbonds.com, you will find hundreds of current Illinois municipal bonds with prices and yields that will jolt the fillings from your molars. And frankly, I think many of them will survive. So if your risk tolerance is stratospheric, consider the Illinois Financial Authority Revenue, due 2040 yielding 8.25 percent; Cook County Refunding Series D, due November 2012, yielding 2.8 percent; Illinois State Series A of 2015, yielding 4.4 percent — even a Belleville Business District taxable municipal bond, due in 2029 with a l4.5 percent yield; and an Illinois Financial Authority Smith Village, due 2020 with a 9.5 percent yield.
__________________
It's STUMP

LinkedIn Profile
Reply With Quote
  #34  
Old 02-24-2011, 05:18 AM
campbell's Avatar
campbell campbell is offline
Mary Pat Campbell
SOA AAA
 
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 85,022
Blog Entries: 6
Default

http://www.chicagobusiness.com/artic...#axzz1ErjKMNpZ

Quote:
Illinois on Wednesday sold $3.7 billion in pension bonds, priced at an average price of 5.56% for securities whose maturities range from 2014 to 2019, according to Kelly Kraft, spokeswoman for the state Office of Management and Budget.

The bonds were sold to fund the state’s required annual contribution for the current fiscal year to its five statewide retirement systems.

Moody’s Investors Service rated the bonds A1 and Standard & Poor’s A+, both with a negative outlook, according to the reports of the credit-rating companies.


__________________
It's STUMP

LinkedIn Profile
Reply With Quote
  #35  
Old 02-24-2011, 05:20 AM
campbell's Avatar
campbell campbell is offline
Mary Pat Campbell
SOA AAA
 
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 85,022
Blog Entries: 6
Default

http://www.upi.com/Top_News/US/2011/...5511298522076/

Quote:
.S. Rep. Peter Roskam, R-Ill., the chief deputy whip, calls Gov. Pat Quinn's notion the federal government could back Illinois' pension debt a "non-starter."

Roskam, in fact, laughed when a reporter asked him about it, the Chicago Sun-Times reported.

"There is no appetite in the House for a federal guarantee for a state pension obligation. None. It's a non-starter," Roskam said. "Given the types of choices Congress is under right now and the budget-cutting pressure that moved $100 billion in cuts, there's no way this House will take on any more obligations, particularly bailing states out of decisions they've made,"


__________________
It's STUMP

LinkedIn Profile
Reply With Quote
  #36  
Old 02-24-2011, 08:21 AM
campbell's Avatar
campbell campbell is offline
Mary Pat Campbell
SOA AAA
 
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 85,022
Blog Entries: 6
Default

http://chicagobreakingbusiness.com/2...scal-woes.html

Quote:
Investors skimmed over Illinois’ well-known financial troubles to vie for a piece of a $3.7 billion taxable pension bond sale on Wednesday.

The state received $6.1 billion in orders from a record 128 investors, according to John Sinsheimer, the state’s capital markets director.

“Well, I have $6.1 billion of bids to tell me the market was comfortable with the budget. And 128 investors must have reached that conclusion as well,” he said.
....
The delay helped the general obligation bonds as prices have climbed in both the municipal bond market and in U.S. Treasuries. Spreads over Treasuries for the deal equaled about 280 basis points, while underwriters set the coupon and yield for the longest bonds, due in 2019, at 5.877 percent.

Sinsheimer said spreads narrowed from a 300-basis-point level a week ago. They also narrowed from so-called “whisper” levels that floated around the market on Tuesday.

Bonds due in 2014 were priced at a 280 basis point spread over comparable Treasuries, versus 285 basis points from Tuesday. The spread on the longest bonds, due in 2019, also narrowed 5 basis points to 240 basis points over Treasuries.
__________________
It's STUMP

LinkedIn Profile
Reply With Quote
  #37  
Old 02-24-2011, 08:46 AM
campbell's Avatar
campbell campbell is offline
Mary Pat Campbell
SOA AAA
 
Join Date: Nov 2003
Location: NY
Studying for duolingo and coursera
Favorite beer: Murphy's Irish Stout
Posts: 85,022
Blog Entries: 6
Default

Okay, who is buying this? Seriously.
__________________
It's STUMP

LinkedIn Profile

Last edited by Moderator8; 02-24-2011 at 07:19 PM..
Reply With Quote
  #38  
Old 02-24-2011, 09:48 AM
MountainHawk's Avatar
MountainHawk MountainHawk is offline
Member
CAS AAA
 
Join Date: Dec 2001
Location: Salem, MA
Studying for Nothing!!!!
College: Lehigh University Alum
Favorite beer: Yuengling
Posts: 64,850
Default

Quote:
Originally Posted by campbell View Post
Okay, who is buying this? Seriously.
We are secretly replacing the US Treasury bonds that the Chinese are buying with Illinois bonds. Let's see if they notice.
__________________

Play in the AO Prediction Game now!



1

Last edited by Moderator8; 02-24-2011 at 07:19 PM..
Reply With Quote
  #39  
Old 02-24-2011, 10:03 AM
FormLetter's Avatar
FormLetter FormLetter is offline
Member
 
Join Date: Feb 2006
Posts: 48,908
Default

Quote:
Originally Posted by campbell View Post
Okay, who is buying this? Seriously.
Connected individuals who can make a more-informed bet on whether one of the following are likely:
a) Illinois can pay these on its own (not likely), or
b) Illinois can obtain a federal bailout (much more likely depending on the connected individuals in the mix)

Last edited by Moderator8; 02-24-2011 at 07:19 PM..
Reply With Quote
  #40  
Old 02-24-2011, 11:23 AM
limabeanactuary's Avatar
limabeanactuary limabeanactuary is offline
Mary Pat Campbell
 
Join Date: Jan 2010
Studying for Anglo-Saxon
Favorite beer: Bass Ale
Posts: 14,142
Default

Quote:
Originally Posted by MountainHawk View Post
We are secretly replacing the US Treasury bonds that the Chinese are buying with Illinois bonds. Let's see if they notice.
I preferred it when it was Folgers crystals.
__________________

Now offering online seminars, live seminars, and everything else under the sun and over the moon for actuarial exams.
Reply With Quote
Reply

Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off


All times are GMT -4. The time now is 02:59 AM.


Powered by vBulletin®
Copyright ©2000 - 2018, Jelsoft Enterprises Ltd.
*PLEASE NOTE: Posts are not checked for accuracy, and do not
represent the views of the Actuarial Outpost or its sponsors.
Page generated in 0.20677 seconds with 9 queries