Muni Think

A longtime bond professional explains why he’s an understanding holder of Puerto Rico general obligation debt -- and angry investor in the island’s sales tax revenue bonds.

As the political gears churn, issuers and borrowers should huddle with legal counsel and financial advisors to consider the possibility of worst-case scenarios in which some or all of the proposed tax reform legislation is enacted.

While muni advocates may have an opportunity to defend private activity bonds and deductions favorable to the market, both Houses of Congress appear to be aligned on banning advance refundings.

Two triple-A rated states received a D-minus in the pension and OPEB category.

Smaller hospitals and colleges and affordable-housing developers will be more challenged in distributing their bonds under proposed tax reforms.

To work well, public policy in a democracy must be transparent and allow time for debate, input and analysis. The given time frame on the House GOP tax bill, which will have broad ramifications for infrastructure development, healthcare and higher education costs and affordable housing, provides little opportunity for a democratic process of debate and compromise to take place.

In a document rife with broken promises and misstatements about the muni market, the “Tax Reform” proposal beats up on the municipal bond market and state and local bond issuers to an extent never envisioned prior to the publication of that proposal.

Issuers were honored in eight categories, and all the award winners are also finalists for the national Deal of the Year award, which will be announced at a Dec. 6 ceremony held at 583 Park Avenue in New York City. The winner will also be revealed online at BondBuyer.com later that evening.

With a tax bill on the table that places the cost of tax cuts on the municipal finance market, the time to voice opposition is now.

After infrastructure and health care legislation failed to materialize, the municipal industry turns its attention to the potential benefits – and risks – of tax reforms now before Congress.