Inside these posts: Municipal bonds

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FINRA looks into muni-bond practices

Municipal bond underwriters are under investigation by the Financial Industry Regulatory Authority to see whether firms are funding lavish entertainment for rating agency executives as well as public officials from towns and cities, FINRA Chief Executive Richard Ketchum said Monday.

“We have seen examples of excessive expenses for the entertainment of issuer officials and rating agency officials, which are then charged to the municipalities’ cost of issuance, thereby reimbursing the firm out of bond proceeds,” he said at FINRA’s annual fixed-income conference in New York. Get the full story »

Illinois bonds, budget in muni market spotlight

Illinois’ lingering fiscal problems will be center stage in the U.S. municipal bond market next week as the state sells $3.7 billion of bonds and as its governor unveils a budget plan for the upcoming fiscal year. Get the full story »

Illinois bonds yielding less than Portugal’s

From Bloomberg News | Bonds from Illinois, the second lowest-rated U.S. state, are yielding less than issues from comparably-rated Portugal as the state prepares to market its largest taxable municipal debt sale in more than seven years.

Bond investors rattled by Illinois’ budget woes

As Illinois lawmakers huddle behind closed doors this week trying to find ways to plug the state’s $13 billion deficit, municipal-bond investors are sizing up how to wager amid the state’s woes.

The state’s bonds have the highest spreads — a measure of the perceived risk of default — of any state, according to Thomson Reuters data. Meanwhile, the cost of insuring against the bonds’ default keeps rising. Many muni-bond investors are avoiding Illinois even as they buy bonds of other cities and states. Others believe the state may prove a good bet, either because it will get its financial act together or be aided by the federal government. Get the full story »

Chicago’s AA credit rating slipping away

From Bloomberg News | With a 2011 budget deficit projected at more than $650 million, the City of Chicago’s credit rating is in danger of sinking further. In fact, it already paid a premium in an August bond offering for schools.

“They’re a AA rated borrower that is trading as if it was rated A,” said Richard Saperstein, managing director at Hightower Advisors Treasury Partners in Chicago told Bloomberg. “This means they’re in line for a downgrade. The market is telling you something.” Get the full story >>

Allstate CEO worried about municipal debt

From Bloomberg News | Allstate Corp. Chief Executive Officer Thomas Wilson said he believes “government borrowing is way out of control” and prompt declines in the value of municipal bonds, a major component of Allstate’s holdings. In the last three quarters, Allstate has cut its municipal holdings, which now total about $20.1 billion.