PUBLIC FINANCE TRENDS
The Value of a Trusted Advisor – Part 2
This update is a continuation of our January issue which analyzed the value of a municipal advisor (FA) by comparing two similar transactions; one that used an FA and another that did not. In this month’s analysis, we look at two very different transactions, differences which also include the use of an FA.
by Laura Fox
PUBLIC FINANCE TRENDS
The Value of a Trusted Advisor
The first graph above compares two bond issues with the following similarities: (i) size (approximately $6 million each); (ii) rating (A1/A+); (iii) maturity schedule; (iv) sale date (12/3/2018); (v) tax status (BQ); (vi) and sale type (negotiated).
by Laura Fox
PUBLIC FINANCE TRENDS
Interest Rates on the Rise
Graph 1 (above left) compares Bloomberg AAA interest rates from the beginning of the year to the present. The results first show how much interest rates have risen in the municipal bond market, with interest rates as much as 0.77% higher on the long end of the yield curve.
by Laura Fox
PUBLIC FINANCE TRENDS
Interest Rates on the Rise
Graph 1, above left, compares Bloomberg AAA interest rates from the beginning of the year to the present. The results first show how much interest rates have risen in the municipal bond market, with interest rates as much as 0.78% higher on the long end of the yield curve.
by Laura Fox
Recent News
Mortgage Rates Jump to Seven-Year High
In November, 30-year fixed mortgage rates hit their highest level in more than seven years at nearly 5%, up almost 1% over the past year.
by Laura Fox
INVESTMENT ADVISORY SERVICES: FEATURED MARKET DATA
U.S. Economy Still Chugging Along
U.S. GDP growth remains solid with a reported 3.5% annualized growth rate during Q318 following a strong Q218 pace of 4.2%. Consumer spending and higher inventory levels contributed a substantial boost while lower net exports detracted from growth. Tax cuts continue to stimulate economic activity although we expect the impact to fade in upcoming quarters.
by Laura Fox
INVESTMENT ADVISORY SERVICES: FEATURED MARKET DATA
Will U.S. Stocks Continue to Rally?
U.S. stocks rallied in the 3rd quarter on strong growth and continued optimism. Meanwhile, U.S. stock market valuations (the price / earnings ratio) have been on the rise since April. This contrasts to other major markets in Europe and Asia where growth has been slower.
by Laura Fox
PUBLIC FINANCE TRENDS
Yield Spread Analysis
Graph 1, above left, measures the spread between a NBQ AAA IL bond issue and a BQ AAA IL bond issue. This comparison was made to analyze the benefit of BQ bonds. The analysis indicates that the BQ benefit in today’s Illinois market is still quite muted.
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PUBLIC FINANCE TRENDS
Yield Curve Dynamics
This indicates that municipal bonds are rich compared to US Treasuries, so while interest rates overall are increasing, municipal bonds are still low on a relative basis compared to their US Treasury counterparts.
PUBLIC FINANCE TRENDS
More Than a Rating
Having a AA-rated insurance provider improves market access for lower-rated entities, but the comparison indicates that a natural AA underlying rating is far better received by the market.
