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Municipal Bonds

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MuniNet provides commentary and analysis relating to municipal bonds and their fundamental credit issues. From an investor perspective, we provide you with daily AAA yield levels on tax-exempt municipal bonds courtesy of Standard & Poor’s Securities Evaluations, Inc….


Daily Municipal Bonds Yields August 23, 2019


 


    Tax-Exempt AAA Non-callable S&P Yield Curve Recap (based on representative indices) at the close of day on August 23, 2019, compared to the previous market day.
    • Municipal bond yields remained mostly steady to close out the week, with a few exceptions.
    • The shortest maturities (6 months and 1 year) rose by 2 basis points compared to yesterday.
    • 5, 15, and 20 year maturities rose again by a single basis point.
    • All other maturity indices remained unchanged.
    • Non-callable municipal bonds, particularly those maturing in ten years or longer, normally carry lower yields than callable bonds reflecting the likelihood that investors anticipate principal repayment on the called bonds prior to the stated maturity. (Optional redemptions usually apply to municipal bonds with maturities of ten years or more).

 


Source: © 2006 Standard & Poor’s Securities Evaluations, Inc., a subsidiary of The McGraw-Hill Companies, Inc. All rights reserved. Information has been obtained from sources believed to be reliable. However, Standard & Poor’s and MuniNet LLC shall not be liable for any claims or losses of any nature in connection with information contained in this document, including but not limited to, lost profits or punitive or consequential damages, even if it is advised of the possibility of same. All references to municipal bonds or information related thereto is for informational purposes only. It is general in nature and based on matters or authorities that are considered reliable but not guaranteed or verified by MUNINET LLC.

 




Featured Bond – Week of August 19, 2019: City of Houston, TX Combined Utility Revenue Bonds

 

Houston, Texas Downtown. One of the cities served by Texas Children's photo

Houston, Texas Downtown.

Featured Bond – Week of August 19, 2019: City of Houston, Texas to Issue $785 Million in Combined Utility System  Revenue Bonds

Overview

The City of Houston is issuing $785 million in Combined Utility System first lien revenue refunding bonds through negotiated sale.  The bonds being sold are divided into three series.   The largest series is the  $540 million Combined Utility System First Lien Revenue Refunding Bonds, Taxable Series 2019 C.   The 2019B bonds are $160 million in Combined Utility System First Lien Revenue Refunding Bonds. The 2020A bonds are $85 million in Combined Utility System First Lien Revenue Refunding Bonds (Forward Delivery).   In the opinion of bond counsel, the interest on the 2019 C bonds are not tax-exempt for federal income taxes while the Series 2019B and Series 2020A (forward delivery) are deemed to be tax exempt.

The city of Houston has applied for ratings from Moody’s and S&P.

More About the Bonds & the City of Houston Combined Utility System

The proceeds of the Series B bonds, together with other available funds, are being issued for the purpose of….

 

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Tollroads Show Strongest Growth in Total Revenue Growth

 

Municipal Bond Sector Revenue Growth

Municipal Revenue Growth Percent Change 2012 to 2017 by sector

Tollroads Edge Hospitals for the Municipal Bond Credit Sector Revenue Honors

Tollroad and Hospital Sectors easily led all other municipal bond credit sectors when it came to annual total revenue growth over the recent five year period spanning 2012 through 2017.

Tollroads saw a median increase of 30.4%, barely edging out hospitals (systems and independent obligors), which grew by 29.8%.

The slowest growing sector belonged to the wholesale electric sector, which only saw a five year bump of 4.3%. The wholesale electric group, also frequently referred to as public power authority joint action agencies, has been showing positive margins as their missions are often limited to the large generating power plants that they financed.

The credit sector summary analysis comparing the growth in total revenues to total expenses from 2012 to 2017 was compiled by Merritt Research Services, LLC using audited reports from approximately 10,000 municipal bond borrowers.

Tollroads 

The Tollroad sector was the clear leader among the major municipal credit sectors.  Its total revenue pace was about double that of its total expenses during the period from 2012 to 2017. The strong revenue growth experienced by the sector doesn’t mean that every municipal bond tollroad borrower raised more than it took in every year; but, the vast majority has been doing that lately. For Fiscal Year 2017, 75% of all tollroads reporting a five year trend showed positive net income.

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Growth in Public Higher Education Debt Outstanding Outpaces All Other Major Municipal Bond Sectors

municipal bond credit sectors 10 year debt trend

Public Higher Education Debt Outstanding Has Grown by Over 80% Since 2007 Leading All Other Major Municipal Bond Credit Sectors

by Richard A. Ciccarone

Municipal Bond Credit Sectors — Ten Year Outstanding Debt Trend

Based on municipal bond credit sector medians,  Public Higher Education and Community Colleges registered the biggest increases in long term debt outstanding — more than any other major credit sectors observed in the municipal bond market during the period 2007- 2017.  Universities and colleges saw a ten year growth of 85.2%,  the most of all major municipal bond sectors tracked by Merritt Research Services LLC,  an independent municipal data and research company that tracks financial conditions on over 10,000 municipal bond borrowers.  Long term debt attributed to Community colleges followed close behind with an 80.7% growth rate.   The ten year time span used in the comparison included the Great Recession as well as the subsequent recovery years.

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Top Picks
The following featured links are approved by MuniNet as exceptional online resources offering up-to-date information on topics that matter
  • EMMA – Electronic Municipal Market Access

    Official online MRSB repository providing free public access to official disclosures, trade data and other information on the municipal securities market.

  • Merritt Research Services: Benchmark Central

    Merritt Research Services provides benchmark median values for municipal credit analysis across 13 different sectors. Freely available and updated regularly.

  • Governmental Accounting Standards Board (GASB)

    Independent organization that establishes and improves standards of accounting and financial reporting for U.S. state and local government.

  • The Bond Buyer

    Established in 1891, an independent paid-subscription information resource of news, analysis and data serving 40,000+ in the municipal finance community.

  • MuniOS.com

    A municipal bond new issue official statement (prospectus) service. MuniOS, a division of ImageMaster Inc, makes available preliminary and final documents. Official statements are provided by region and state.

  • IRS Tax-Exempt Bond Statistics

    Includes data on tax-exempt "public purpose" (Governmental) and "private-activity" bonds, with statistical tables and Statistics of Income Bulletins.

  • What Are Municipal Bonds? - Investor.gov

    What Are Municipal Bonds?

    What are municipal bonds? Municipal bonds (or “munis” for short) are debt securities issued by states, cities, counties and other governmental entities to fund day-to-day obligations and to finance capital projects such as building schools, highways or sewer systems. By purchasing municipal bonds, you are in effect lending money to the bond issuer in exchange for a promise of regular interest payments, usually semi-annually, and the return of the original investment, or “principal". An excellent primer on municipal bonds, particularly from an investors perspective. Answering these questions: Where Can Investors Find Information About Municipal Bonds? What Are Some Of The Risks Of Investing In Municipal Bonds? In Addition To The Risks, What Other Factors Should You Consider When Investing In Municipal Bonds?