PowerShares National AMT-Free MuniBd ETF
Despite its bankruptcy filing, Puerto Rico has the option to negotiate with its creditors outside the court. It could go through a process equivalent to a Chapter 9 bankruptcy filing.
According to the American Society of Civil Engineers, the US has to spend ~$3.6 trillion by 2020 to make needed infrastructure improvements. This should mean more municipal bonds (MUB) will be issued to help finance these projects.
In 2011, led by Dr. William Dudley, the New York Fed had commissioned a report on the major economic issues facing the island of Puerto Rico.
Puerto Rico has been in the spotlight recently due to the downgrade of its debt to junk status in February, 2014, by all three major credit ratings agencies (Standard & Poor’s, Moody’s, and Fitch).
The inflation and interest rate expectations of consumers and firms are important variables determining bond prices.
In this part, we will discuss aspects of Plosser’s speech relating to a rules-based or systematic approach to forward guidance.
Average maturity for new municipal bond issues came in lower at 15.2 years in Q1 2014 compared to 16.3 years in 2013 and an average of 17.7 years over the period 1996-2013.
Municipal bond issuance through negotiated sales declined in Q1 2014 compared to Q1 2013, slumping by 25% to $46.1 billion.
As with all investments, fixed income investments are subject to risks too. Bond prices increase when interest rates decline and decline when interest rates increase.
The municipal bond (RVNU) market’s debt outstanding on December 31, 2013, stood at ~$3.7 trillion, making up about 9.2% of the total outstanding debt in the U.S.
Energy & Utilities
In this article, we’ll discuss how the Fed’s Odyssean and Delphic guidance in March has impacted financial markets.