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January 28, 2010. The Bond Buyer's 20-Bond Index® rose 9 basis points to 4.39. Secondary market trading continues to be relatively light. Recent news reports highlighting the heightened degree of credit risk with the states of California and Illinois have once again reminded investors of the need to carefully evaluate the safety of their investments.
Below are links to The Bond Buyer's ® 20- Bond Index along with a chart showing the trend of the Bond Buyer's ® 20-Bond Index for the past two years. For those interested, we have data for prior years and will be please to provide it upon request.
The Municipal Securities Rulemaking Board's EMMA system is now mandatory for new issue disclosure as well as continuing disclosure. As an example, both the preliminary and final official statements for the recent issue of $3,100,000 City of Salem, Illinois can be downloaded from the link above, or from the following web address: http:/emma.msrb.org/. Over the next 12 months, investors will be able to get more current information on the financial affairs of the municipalities in which they hold securities. For issuers, the increased transparency should foster greater market access for future bond and note issues.
For those interested, the following links will take you to the Municipal Securities Rulemaking Board web site with the text of the new regulations. As always, please feel free to contact us regarding this or similar matters.
http://www.msrb.org.
Historical Trivia
Prior to the late 1960's, the weekly Bond Buyer's ® 20-Bond Index moved only a few points from week to week. Beginning is the second half of 1967, the effects of the federal spending for the Vietnam conflict along with expenditures for the Great Society programs of the outgoing Johnson administration combined to start an upward movement of interest rates that culminated with the Bond Buyer's ® 20-Bond Index hitting a peak of 13.44 in the second week of January, 1982. In many states, the statutory maximum interest rate allowed was well below the prevailing market rates, preventing many bond issues from coming to market. Several states, including Illinois, changed their statutory maximum allowable rate by tying it to a percentage of the Bond Buyer Index. For additional information, click here.
Copyright 2003-09 Provident Capital LLC. All rights reserved.
Modified February 1, 2010