Muni Think

Many cities and counties are paying substantially more in interest than is warranted by the real risk of their bond issues. How can local governments remedy this situation and thereby achieve better results for their taxpayers? Marc Joffe and Shannon Sohl believe the solution involves greater transparency.

There is undoubtedly considerable waste from inefficient advance refundings, but let's not throw out opportunities to save taxpayers' money, when warranted, by giving credence to half-baked theories based on shoddy scholarship, says Andrew Kalotay.

In the first half of 2013, we continued to observe a trend of increasing annual enforcement activity by the Securities and Exchange Commission, with a pronounced focus on the sufficiency and accuracy of the municipal market disclosures provided by state and local governments.

Over the years, Detroit's financial deterioration and the city's downturn have been well documented, so its bankruptcy filing came as little surprise to most market participants. This point can be reinforced by Interactive Data's analysis below of six different bonds issued by Detroit and related entities, which are representative of the types of debt and structures Detroit has issued.

A recent study of the economics of advance refundings asserts the provocative conclusion that "[t]he widespread practice of advance refundings of municipal bonds is, at best, zero net present value, though wasteful of fees." This study may well compel a counter-study from the many proponents of advance refundings.

Herbert J. Sims' Richard Larkin does not believe that Detroit had to file for Chapter 9 municipal bankruptcy.

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.