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July 2, 2009. The Bond Buyer's 20-Bond Index® rose a meaningless 2 basis points o 4.81, indicating an essentially stable municipal market. Today's report on job losses and an increase in the unemployment rate to 9.5% should lessen concern about inflation in the near future. High unemployment, excess business capacity, and a gloomy outlook on the part of consumers does not create fertile ground for inflation and higher interest rates.
The Municipal Securities Rulemaking Board's EMMA system is now mandatory for new issue disclosure as well as continuing disclosure. 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.
Investors should keep in mind that underwriters will no longer be required to mail a printed final official statement to investors since the document will be available online without charge.
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.
2008 was a tough year for municipal and state governments. 2009 is looking even more challenging. Because of our depth of knowledge and experience, we are available to provide guidance through the new era of austerity through refinancing or restructuring of obligations.
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.
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.
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Modified July 2, 2009