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  #91  
Old 11-08-2011, 12:25 PM
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http://blogs.barrons.com/incomeinves...lerated-in-q3/

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Rating agency Moody’s Investors Service said Tuesday that it downgraded far more public finance ratings in the third quarter than it upgraded, as state and local governments continue to struggle economically. Lower-rated municipalities typically have to pay investors higher interest rates when they borrow compared to their higher-rated brethren, although downgrades only rarely portend defaults within the generally safe world of muni bonds.

At 5.3 to 1, the third quarter had the highest downgrade-to-upgrade ratio of any quarter since the onset of the financial crisis in 2008, Moody’s said, noting that the quarter saw 163 downgrades versus 127 the prior quarter, and that “a rapid deterioration in credit metrics” led to 14 multi-notch rating downgrades, significantly more than average, consisting mostly of local government ratings. Quoth Moody’s:

“The strains on core operating expenses and revenue sources that led to the high volume of downgrades over the last three years will likely persist over the next year, underpinned by economic stagnation, high unemployment, declining home values and low consumer confidence. Therefore, we expect downgrades to continue exceeding upgrades in upcoming quarters.”
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  #92  
Old 11-09-2011, 05:26 PM
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And finally, at least 3 years later than it should have taken, one of the worst-kept secrets in the country is finally unearthed.

http://blog.al.com/spotnews/2011/11/...ion_vo_14.html

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BIRMINGHAM, Ala. -- The Jefferson County Commission has just voted 4-1 to file an estimated $4.1 billion bankruptcy, the largest municipal bankruptcy in U.S. history.

The commission's action came after it spent approximately six hours over two days meeting with its lawyers to discuss legal options, including a Chapter 9 bankruptcy filing and a settlement with creditors on the county's $3.14 billion sewer debt.

Commissioner Jimmie Stephens made the motion to file bankruptcy, which was seconded by Commissioner Sandra Little Brown. " "It is time to resolve this once and for all," Stephens said.

Another factor in the decision appears to have been the Alabama Legislature's inability to reach a consensus on any means of helping the county resolve its financial difficulties.
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  #93  
Old 11-15-2011, 03:08 PM
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http://www.reuters.com/article/2011/...7AD21120111115

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The capital of Pennsylvania will let the state or a federal bankruptcy judge determine how it will get out of $318 million in debt after missing the last deadline on Monday to come up with a solution of its own.

Harrisburg, which incurred the liability after it renovated its troublesome incinerator, had until 5 p.m. on Monday to come up with an agreement with creditors to avoid a state takeover.

A deal was never struck. City Council President Gloria Martin Roberts said a majority of city council members backed out of an agreement reached behind closed doors early on Friday.
....
Mayor Linda Thompson said the city's inability to find that agreement means Harrisburg will yield to a receiver that will be appointed by Governor Tom Corbett's administration, under the terms of a new law that took effect last month.

A spokesman for the majority of city council members that voted to file for Chapter 9 municipal bankruptcy protection in October, however, said federal court could still help Harrisburg escape its growing financial chasm.

Harrisburg, a city of about 50,000 and the state capital, is struggling to pay for essential services while also facing about $300 million in debt linked to a revamp of its incinerator. The city council approved the bankruptcy filing in a 4-3 vote on Oct 12.
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  #94  
Old 11-22-2011, 04:14 PM
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on Chapter 9
http://stateline.org/live/details/st...ntentId=614970

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Who can file for Chapter 9? Only municipalities — not states — can file for Chapter 9. To be legally eligible, municipalities must be insolvent, have made a good-faith attempt to negotiate a settlement with their creditors and be willing to devise a plan to resolve their debts.

They also need permission from their state government. Fifteen states have laws granting their municipalities the right to file for Chapter 9 protection on their own, according to James Spiotto, a bankruptcy specialist with the Chicago law firm of Chapman and Cutler. Those states are Alabama, Arizona, Arkansas, California, Idaho, Kentucky, Minnesota, Missouri, Montana, Nebraska, New York, Oklahoma, South Carolina, Texas and Washington.

The remaining states all want a say in the process, in some cases requiring that municipalities receive state approval before they file. One of those states, Pennsylvania, is now in the process of challenging the bankruptcy declaration made by its own capital city, Harrisburg, in October.

Georgia is the only state that does not allow its municipalities to file for bankruptcy under any circumstances. Georgia municipalities in severe fiscal trouble “are left to work things out within the state political system,” says Paul Maco, a municipal bankruptcy expert and partner with the Vinson & Elkins law firm in Washington, D.C. That could include asking the legislature for emergency funds.
more at link
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  #95  
Old 11-27-2011, 09:01 PM
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Time magazine (12/5) has an interesting article on Rhode Island's beleaguered underfunded pensions and recent attempts to implement a solution. Maybe all you pension people already know all this, but I found it enlightening (and hopeful and drear)
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  #96  
Old 11-28-2011, 06:29 AM
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Hey Falco - I've got a thread on the public pension situation, which would be a good place to put a link.

I try to limit my links here mainly to talk of bankruptcy/credit downgrades/restructuring of munis, etc. Sometimes the reason are the pensions, sometimes not.

Current public pension thread here:
http://www.actuarialoutpost.com/actu...d.php?t=207956
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  #97  
Old 12-09-2011, 11:55 AM
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http://www.investmentnews.com/articl...edate=20111208

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The U.S. municipal-bond market is 28 percent larger than reported in June, according to a quarterly Federal Reserve release, which used new data showing individuals own more state and local-government debt.

The face value of outstanding municipal bonds was $3.7 trillion at the end of September, based on figures from Mergent Inc., a private data vendor, compared with the previous figure of $2.9 trillion at the end of June, the Fed said.

....
Investors pulled more than $30 billion from municipal-bond mutual funds from November 2010 to June, according to data from Lipper US Fund Flows. Lingering strains from the recession fueled speculation that defaults would jump, while banking analyst Meredith Whitney last year predicted “hundreds of billions of dollars” of municipal defaults.

....

The tally of municipal debt held directly by households is now $1.9 trillion, up from $1.07 trillion in the prior report, Fed data show. That doesn’t count bonds owned indirectly, such as through mutual funds, which hold about $528 billion.


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  #98  
Old 12-16-2011, 07:11 PM
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http://www.bloomberg.com/news/2011-1...ni-credit.html

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This was supposed to be the year the $3.7 trillion state and local debt market would be rocked by an exploding pension time bomb and “hundreds of billions of dollars” of defaults, according to analyst Meredith Whitney.

Whitney’s Armageddon never came. Instead, munis became the star performers of 2011.

An investor who bought $10,000 of munis the day after Whitney’s Dec. 19 prediction on CBS’s “60 Minutes” television program would have made about $1,050, based on the 10.5 percent gain in the Merrill Lynch Municipal Master Index, which calculates price changes and interest income. That beats U.S. Treasuries, stocks, corporate bonds and commodities. The muni return is better still because interest income is tax-exempt.

...

Defaults concentrated in bonds of community development districts, nursing homes and other small and unrated parts of the market are “manageable,” said Judy Temel, director of credit research at Samson Capital Advisors LLC in New York.

Not only did the municipal market survive Whitney, it shrugged off the bankruptcies of Harrisburg, Pennsylvania, and Jefferson County, Alabama, the largest for a government in U.S. history. The failures were the culmination of years of fiscal stress and were anticipated, Temel said.
The bomb's still ticking of course, but so are a lot of other bombs.
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  #99  
Old 12-17-2011, 06:58 AM
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If Greece hasn't even been able to fully default yet, it's not surprising that munis tend to take years to fall apart.
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  #100  
Old 01-30-2012, 05:07 PM
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This looks like the summer of fun:
http://www.investmentnews.com/articl...edate=20120130

Quote:

Municipal bonds were one of the darlings of 2011, but the threat of “super downgrades” or downgrades of two or more notches could have a big impact on prices.

Peter Hayes, head of municipals at BlackRock Inc., told advisers at the 2012 Investment Management Consultants Association in New York that he expects super downgrades to accelerate throughout the year.

“We're expecting a radical change in the methodology of the ratings agencies because of Dodd-Frank,” he said. One of the aspects of the Dodd-Frank Act requires ratings agencies to review their methodology for credit ratings annually, Mr. Hayes said.

The spreads between higher-rated municipal bonds and less-than-investment-grade ones are “dramatic,” so a severe downgrade could have a big impact on pricing, Mr. Hayes said.
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