Muni Think

The Detroit bankruptcy doesn't necessarily undermine the market for general obligation debt for all governmental borrowers.

Chicken Little is alive and well after Detroit's filing for Chapter 9 bankruptcy protection.

Build America Mutual details the actuarial analyses of pension and other postemployment liabilities that it incorporates in its review of every municipal bond it insures.

It has been just over a month since Detroit's emergency financial manager Kevyn Orr announced to our market that Detroit would treat its GO bondholders as "unsecured" creditors and pay them only pennies on the dollar. It is past time for the bond market to forcefully react.

It looked and felt like the sequel to Man of Steel had arrived prematurely, but this time, General Zod seemed to set his sights on the bond market, recruiting an army of bond fund managers to annihilate everything from one-year Treasuries to 30-year corporate and municipal bonds.

Savvy indenture trustees and bondholders familiar with the Chapter 11 process understand that being ahead of the curve often provides key advantages. What is less understood is that proactivity is even more important in Chapter 9 (municipal) bankruptcy situations, and often must predate any bankruptcy filing by several months.

Michael Decker's recent letter offers nine criticisms of our report on municipal bond markups. I briefly address his comments in the order they appear so your readers can evaluate his arguments fairly.

If municipal issuers have not come out of the woodwork yet in favor of the tax exemption, this should just about do it. Federal trustworthiness now is in shambles regarding subsidy programs designed to replace the tax exemption.

A recent research paper suggests widespread violations of MSRB fair pricing rules are rampant in the municipal market. But scratching just below the surface reveals serious flaws in the methodology and assumptions underlying the authors' conclusions.

Lessons from litigation over interest rate derivatives may come into sharp focus as the time for Lehman to bring claims against counterparties who terminated derivative instruments shortly after its bankruptcy filing will expire.