(Nov. 28) -- Hurray! December is almost here to help close an unprecedented year for municipal bonds. Tax-exempt yields rose this holiday-shortened week. Go here for more details.
(Nov. 21) -- Moody's on late Friday downgraded bond insurer Assured Guaranty to Aa2 from triple-A and cut FSA, which plans to merge with Assured, to Aa3. Another rating agency botch-up!
(Nov. 20) -- Ambac paid $1 billion to get rid of $3.5 billion in riskier security exposure, which in a strange way is a "good" thing. S&P has still downgraded Ambac to single-A from AA.
(Nov. 14) -- Assured Guaranty has agreed to buy bond insurance competitor Financial Security Assurance (FSA) from parent Dexia, combining two of the AAA companies still standing.
(Nov. 6) -- We told you California's recent budget was a joke. Gov. Schwarzenegger said the current-year deficit is already $11 billion. He proposed more cuts and a big sales tax hike.
(Nov. 6) -- California's soaring budget gap should mean a big yield premium on state bonds over higher-rated municipal bonds. The state is now a beggar when it comes to finding buyers.
(Nov. 5) -- Moody's Investors Service downgraded bond insurer Ambac to Baa1 from Aa3, which wasn't much of a surprise given the rating agency's past warnings on mortgage-related losses.
(Oct. 24) -- Assured Guaranty Corp., which still carries a triple-A rating, agreed to reinsure $13 billion of municipal bonds backed by downgraded CIFG N.A. This is a positive step for investors.
(Oct. 24) -- In a special print edition last week we said our California muni bond fund index fell to its lowest level in 21 years. The NAV has since rebounded and jumped 5.3% in one week.
(Oct. 15) -- We told investors to expect "eye-popping" yields on California's note sale and indeed they topped 4% in retail pricing. It isn't just the crazy market; the state paid for its budget mess.
(Oct. 9) -- FSA, one of the few bond insurers still clinging to a triple-A rating, received downgrade warnings from Fitch and S&P. Financial pressure at European parent Dexia is one main reason.
(Oct. 24, 2008) -- All the items posted below are being left for background. Many of these items might be "stale" in terms of updated developments.
(Oct. 7) -- Subscribers know what we had to say in October's edition about buying California bonds and the appropriate yield premiums. Subscribe now at a time of unprecedented turmoil.
(Oct. 7) -- Moody's Investors Service said it will delay a plan to upgrade many municipal bonds through a "global" corporate scale. Unsettled credit markets were cited for the delay.
(Oct. 7) -- Fitch Ratings, citing "extraordinary turmoil in the global financial markets," is delaying a decision on a "recalibration" plan that would no doubt upgrade many municipal bonds.
(Oct. 3) -- Gov. Schwarzenegger told the Feds that California can't sell its $7 billion revenue anticipation note issue unless the proposed bail-out unfreezes markets.
(Sept. 18) -- Moody's said that revised loss projections tied to subprime mortgage products could lead to possible "multi-notch" downgrades for bond insurers MBIA and Ambac.
(Sept. 19) -- A revised state budget plan to avoid Gov. Schwarzenegger's veto represents yet another mediocre compromise that includes the usual borrowing and gimmicks.
(Sept. 19) -- A comprehensive U.S. approach to calming the credit markets is a good thing, but just remember: the vast majority of traditional fixed-rate muni bonds remain very safe.
(Sept. 18) -- Several new muni bond sales were postponed the last couple days until the current broader market turmoil subsides. Traditional "safer" muni bonds still remain a haven.
(Sept. 11) -- A bond backed by COPIA: The American Center for Wine recently jumped 40% in trading value after our discussion in September's print edition. Subscribe now to understand why.
(Sept. 11) -- The Aromas-San Juan Unified School District general obligation bonds were cut to BB+ from BBB-minus by Fitch Ratings. See a brief discussion here.
(Sept. 12) -- A few deals sold this week illustrate current yields for an (almost) triple-A rated credit and other issuers rated a bit lower. Go here for a summary of recent trends.
(Sept. 4) -- Our September print edition explains why investors with insured municipal bonds are better off than the fear-mongering media would lead them to believe. Subscribe here.
(Sept. 4) -- We said in our September print edition that CIFG probably would be next to fix its mortgage-related mess. Now the company has confirmed it is close to a deal.
(Sept. 3) -- ACA Financial Guaranty announced its reorganization "with a complete restructuring of its balance sheet and obligations." Our September issue explains the significance of it.
(Aug. 15) -- Will the bond insurers now carrying junk ratings meet obligations on any municipal debt that defaults? Readers of our August print edition get the latest analysis. Subscribe here.
(Aug. 14) -- Standard & Poor's has removed bond insurers MBIA and Ambac from a downgrade warning list and assigned a "negative" outlook to both companies' AA credit ratings.
(August 8) -- Maryland's insurance commissioner announced a settlement that would keep insurer ACA's guarantee in place for muni bonds, including a troubled one we wrote about in August.
(July 31) -- Fitch Ratings has proposed a "recalibration" of municipal bond ratings that would upgrade many G.O. and revenue bonds by one or two notches.
(July 30) -- The Securities and Exchange Commission finally has voted to pursue a better disclosure system for municipal bonds. See our past comment here on the need for a muni "Edgar" plan.
(July 23) -- Our July print edition said you can't trust the bond insurers or the rating agencies. Case in point: Now Moody's says it might lower FSA and Assured Guaranty below triple-A.
(June 30) -- A mandatory tender on July 1 will pay (at full price) the bankrupt Vallejo's variable-rate 2003 and 2002 capital improvement project COPs and a 2001 golf course COP.
(June 24) -- California sold $1.5 billion of general obligation bonds on June 24. The state's sales provide added yield over higher-rated issuers, though this offering didn't thrill us.
(June 19) -- Moody's Investors Service downgraded bond insurer MBIA to A2 and guarantor Ambac to Aa3, marking yet another disgrace for these companies (once assumed to be trustworthy).
(June 11) -- Vallejo's city manager has proposed a fiscal 2009 budget that seeks to "avoid defaulting" on debt obligations during bankruptcy. Read our comments here.
(June 9) -- The California Cities Home Ownership Authority said it has reached a closing agreement to terminate an IRS audit on 2001 Series A and B variable-rate pass through obligations.
(June 6) -- Standard & Poor's downgraded bond insurers XLCA (to BBB-minus from A-minus) and CIFG to A-minus from A-plus. It also warned FGIC about a downgrade below double-B.
(June 5) -- Standard & Poor's downgraded bond insurers MBIA and Ambac to double-A from triple-A, ending the companies' months-long effort to salvage their top ratings.
(June 3) -- Moody's Investors Service threatened again to downgrade MBIA and Ambac. This could be the death knell for their Aaa ratings. Will they even keep a double-A in the future?
(May 19) -- States can continue to exempt interest on "in-state" municipal bonds from state income tax while taxing the interest on out-of-state munis, the U.S. Supreme Court ruled.
(May 6) -- UBS, a big underwriter of muni bonds, is trying to sell its public finance department because of losses tied to the subprime mortgage mess and other factors, media reports said.
(May 1) -- Empire Homes, involved with the Anaverde master-planned community in Palmdale, has filed for bankruptcy. Be careful, however, about confusing this with local project areas.
(May 1) - An issuer in the current market can sell identical bonds (same maturity), except one of them offers a full percentage point more yield than the other. See our May issue for the details.
(May 1) - The annual borrowing binge for municipal tax and revenue anticipation notes kicks off soon. Is it a sellers' or buyer's market? See our May print edition for the details.
(May 31) -- ACA Capital Holdings, Inc., has reached another forbearance agreement, this time through June 20, to sidestep collateral posting requirements we discussed previously.
(Apr. 24) -- Fitch Ratings downgraded the bankrupt Valley Health System's bonds to CC (double-C) and suspended the rating because of a lack of information.
(Apr. 18) -- The $67.67 million Elk Grove CFD No. 2005-1 (Laguna Ridge) Bonds (dated 7-12-2007) relied on a "draw" of improvement funds to help cover a recent semi-annual payment.
(Apr. 10) -- With some big "raw land" developments stalled in their tracks, can Mello-Roos bond defaults be far behind? Our April print edition includes one example of a possible trend.
(Apr. 10) -- Are municipal bonds treated unfairly on credit rating scales? Our April print edition explains why California wants a triple-A, and why we question the deficit-loving state's motives.
(Apr. 10) -- Our April print edition included the latest round of bond insurance downgrades, including Fitch's lowering of MBIA to double-A. The print edition discusses the continuing mess.
(Mar. 27) -- Fitch Ratings downgraded insurer XLCA to BB from single-A. Fitch cut FGIC to BBB from AA. The bonds will often be graded higher (using "underlying" ratings) and remain safe.
(Mar. 7) -- Smaller bond insurer CIFG Guaranty was downgraded to A1 from Aaa by Moody's, and on March 7 Fitch lowered the company's rating to AA-minus. See why here.
(Mar. 6) -- Our March print edition features an overview of a California Infrastructure Bank bond sale for a Walt Disney Family Museum in San Francisco. A Disney foundation is a key player.
(Mar. 4) -- The California Department of Water Resources might convert as much as $1 billion of floating-rate bonds to fixed rates in a sign that market chaos could generate new supply.
(Mar. 5) -- The parent of bond insurer Ambac plans to raise $1.5 billion to try to protect its AAA standing. The insurer will steer away from riskier markets. But we don't want them in our market!
(Mar. 4) -- Vallejo's City Council voted 5-to-2 early this morning for budget cuts to avert bankruptcy. It still needs to approve a longer-term plan by Apr. 22.
(Mar. 4) -- California's $1.75 billion general obligation bond sale featured yields too attractive too resist (our March print edition advised to check for premiums).
(Mar. 3) -- A payment is being made on March 3 to cure the default and make a final distribution on the Indian Wells Valley Water District A.D. No. 91-1 bonds that previously defaulted.
(Mar. 3) -- Many local and state governments made incredibly stupid decisions in selling auction-rate municipal bonds. See what the press doesn't report in our March print edition.
(Mar. 1) -- See March's print edition for advice on what to do after tax-exempt yields have soared relative to Treasuries. This isn't like temporary rate spikes last year, but you can't wait forever.
(Feb. 27) -- Vallejo said in a disclosure notice that, in case of a bankruptcy filing, it intends to keep paying debt service on water revenue, assessment district, and tax allocation bonds.
(Feb. 26) -- Moody's Investors Service has affirmed MBIA at AAA, backing away from a downgrade warning. Moody's kept a "negative" outlook on the bond insurer. This is a short-term boost.
(Feb. 26) -- New MBIA Chairman Jay Brown said in a letter that his company will separate its muni bond operations from riskier securities "as soon as it's feasible" but within a five-year period.
(Feb. 25) -- The Pomona Unified School District said the IRS is questioning the tax-exempt status of certain 2000 and 2001 bonds. We already listed other districts facing audits.
(Feb. 25) -- Standard & Poor's has affirmed MBIA at AAA, backing away from a downgrade warning. S&P kept a "negative" outlook on the bond insurer. This provides a little breathing room.
(Feb. 25) -- Standard & Poor's downgraded FGIC to A from AA because of heightened concern over potential losses. S&P also cut XLCA to A-minus from AAA, citing its need to raise capital.
(Feb. 25) -- Ambac might be close to a plan to salvage its triple-A bond insurance ratings, according to anonymous sources in media reports. This could be a "turnaround" week of sorts.
(Feb. 22) -- Moody's Investors Service is reviewing the Aaa rating of smaller bond insurer CIFG Guaranty. CIFG raised capital recently but Moody's raised mortgage-loss estimates since then.
(Feb. 21) -- MBIA has joined Ambac and FGIC in studying ways to split in two to protect municipal bonds; this is a very important development to watch if it can work.
(Feb. 11) -- The Rosamond Community Services District will make a distribution to cover the March 2, 2008, interest payment and defaulted principal from September 2005.
(Feb. 14) -- Bond insurer FGIC joined XL Capital Assurance in having its rating lowered to A3 from Aaa by Moody's Investors Service. See other brief updates on the bond insurers here.
(Feb. 1) -- The Valley Health System has approved the sale of the Moreno Valley Community Hospital to Kaiser Foundation Hospitals. This updates a short item in the Feb. print edition.
(Feb. 7) -- The California Coastal Commission late last night voted 8-2 against allowing a toll road extension through southern Orange County. The decision will face an appeal.
Gilroy's City Council on Jan. 22 unanimously approved purchasing Gilroy Gardens (formerly Bonfante Gardens). Our print subscribers already know why investors care about this plan.
(Jan. 24) -- Fitch Ratings cut bond insurer XL Capital Assurance to single-A from AAA after XLCA's parent didn't raise capital. Meanwhile, bailout talk is helping MBIA and Ambac.
(Jan. 30) -- Concern over an economic slump trumped fear about inflation as the Federal Reserve today cut a key interest rate by another half of a percentage point.
(Jan. 22) -- Fitch recently cut Ambac's bond rating to AA, and Moody's warned MBIA about a possible rating cut after the company raised another $1 billion. The fight continues.
(Dec. 31) -- The Selma Public Financing Authority has made a sizable payment on the Series 1994C Revenue Bonds (Taxable) that previously defaulted. It includes all remaining principal.
(Dec. 31) -- ACA Capital Holdings issued a statement in reaction to press commentary and headlines on the Maryland Insurance Commissioner's action.
(Dec. 31) -- The January print edition discusses this development regarding Berkshire Hathaway Assurance Corp. As a result, the commentary won't be repeated here.
(Dec. 20) -- S&P now says that ACA's guarantee is CCC. Yet if you own certain Inglewood redevelopment bonds they are BBB+. Other munis are CCC, but are they really? Know what you own!
(Dec. 19) -- Troubled single-A bond insurer ACA Financial Guaranty is now triple-C, according to Standard & Poor's. Meanwhile, a newspaper says an ACA bail out is discussed.
(Dec. 17) -- Ashby USA, LLC, says it missed a Dec. 10 special tax payment that helps to secure the Temecula Public Financing Authority CFD No. 03-02 bonds. Read more here.
The Valley Health System on Dec. 13 filed for Chapter 9 bankruptcy protection, a stopgap measure at best to see if it can stem the flow of red ink. Read more here.
The ABC Unified School District said the Internal Revenue Service is questing the tax-exempt status of $18.74 million G.O. Bonds (2003 Series A). See an update at this link.
California is delaying, by a few more years, requirements that hospitals upgrade buildings against earthquake risk. This could ease pressure on some bond-financed entities. Read more here.
The Valley Health System's credit rating has been downgraded to CCC by Fitch Ratings after the failed election discussed in a separate story below. An update discusses Fitch's reasoning.
On Nov. 16 we questioned (see headline below) why Standard & Poor's still had a "positive" outlook on California state bonds. On Nov. 20 S&P revised its outlook to "stable." Question answered!
(Updated above) Calif. state bonds still have a "positive" outlook from S&P. It should move the state back to "stable" (at best). California's political leadership doesn't deserve a "positive" view.
The workout for Nevada County CFD No. 1990-1 (Wildwood Estates) Bonds has been delayed again due to shakier housing and credit markets. See the latest news here.
We recently said investors should keep seeking to punish the state in upcoming bond sales. The state's legislative analyst confirmed our concern on Nov. 14, projecting a huge deficit.
Some U.S. Supreme Court justices appeared amenable to letting the muni market's current system of state tax-exemption stay in place during oral arguments in a key Kentucky case.
The U.S. Supreme Court oral arguments on the "Kentucky" case were held in early November. Print subscribers know where we stand on various issues, but here are other brief comments.
Headlines above in green are updates provided after November's edition was mailed. Some stories used for a test preview will be removed soon.
What New Deals Are Pending in the Market?
In future weeks we will be featuring an expanded list of new-issue sales pending in California's municipal bond market. See a preview with a limited list here.
We long expressed our belief the Lancaster A.D. 93-3 Bonds were in a solid area that would eventually rebound. The bonds have in fact just been brought current the other month.
Securities and Exchange Commission Chairman Christopher Cox has asked Congress to improve municipal bond disclosure and accounting.
Securities and Exchange Commission Chairman Christopher Cox said in a speech that buyers of municipal securities "in many respects get second-class treatment" under current federal securities law. Read a brief summary (under SEC Chairman Wants Muni Changes).
So the chairman of the Securities and Exchange Commission wants to improve municipal bond market disclosure? Two years ago we told regulators there is a huge flaw hurting individual investors, and you can read about it here.
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California can't quit selling general obligation bond deals thanks to a backlog of voter-approved debt. The state also will argue for continued public spending during a time when the economy is slowing. The Bond Advisor's recent issues discuss the topic as investors ponder a strategy to pursue higher "relative" yields.
Most municipal bonds pay on time and in full. Recently, however, the Bond Advisor discussed scores of bond deals that trade at steep discounts to par, some only pennies on the dollar. Subscribers keep on top of trends for troubled muni bonds, and learn how to avoid ugly deals in the first place.