MainLine West Monthly Market Review – April 2013

Getting it Wrong

Municipal Market Review: 

The municipal market has sprung back from its seasonal weakness and may be preparing itself for a strong summer season.  A resilient Treasury market and light municipal issuance have helped push yields on municipal bonds lower over the last couple weeks.  Highlights are as follows:

  •  Long-term yields decreased 15 to 23 bps (15 to 25 year bonds), while short-term yields have decreased 10 to 22 bps (5 to 10 year bonds).
  •  Municipal bonds slightly outperformed the Libor Swap market, with value now being mixed along the curve.
  •  Municipal Market Advisor Default Trends Analysis (data from MMA) shows the pace of defaults in 2013 is ahead of 2012.  More specifically:
    • 19 issuers for a par amount of $4.97 billion have defaulted as of May 1, 2013.
      •  The majority of the defaulted par amount is from Jefferson County Sewer which accounts for $3.2 billion.  This debt had been supported by the County, itself or the insurers since entering bankruptcy over a year ago.  As of February 2013, the trustee has halted all payments to investors, by any of the sources of support which has triggered the default.
    •  22 issuers for a par amount of $.40 billion had defaulted by this same time last year.
  • A recent report co-published by the Harvard University Institute of Politics, and the Fels Institute of Government entitled “The State of The States 2012” has attracted some misinformed press.  We cover this report and the “misinformed” press in this month’s market review.  To review the full report please go to

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