Provident Capital LLC is an independent municipal financial advisory firm based in St. Louis, Missouri. We act solely as financial advisors to governmental, educational, and not-for-profit entities. We firmly believe that advice in planning and managing debt must come from an independent advisor. By independent, we mean that the advisor cannot be a part of an investment banking firm. There is an inherent conflict of interest in investment bankers offering advice.
July 3, 2008. The Bond Buyers ® 20-Bond Index was 4.67 for the week ended Thursday, July 3. In spite the surprising decline in the week's 20-bond index, the lack of confidence in the economic outlook, along with the arrival of inflation, is pushing rates on longer term fixed income investments higher. There are currently no commentators who believe this is a short-term problem.
Over the past months, many of the municipal bond insurers have had their credit ratings lowered or withdrawn. Recently, Chris Winters of Winters & Co. Advisors, LLC sent out a summary of the current ratings of the municipal bond insurers. We are including his chart here with thanks to Chris.
Not included above, Berkshire Hathaway Assurance Company holds the highest credit rating from all three rating agencies. The company was recently started by Warren Buffet's Berkshire Hathaway company in response to the credit problems of the other credit enhancers.
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 from July 2006 to the current week.
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 8, 2008