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Results from this month’s bond elections show a big win for California schools. Take a look at the measures that passed and the few that failed.
“Investors prize munis in general because they are considered nearly as safe as Treasurys, backed by tax revenue or fees on critical public services, such as water. The debt also offers interest payments that are typically free from federal taxes. In the years since the financial crisis, the highest-rated municipal bonds have often yielded more than Treasury debt. But that trend has begun to reverse in recent months, intensifying some analysts’ concerns about the risks of purchases at current prices.”
“We as municipal market participants should really be penalizing in some way, by almost not giving them any access to the market,” Peter Hayes, who oversees $119 billion as head of munis at BlackRock, said in New York on Wednesday. “Think about it — they’re a state without a budget, they refuse to pass a budget, they have the lowest funded ratio on their pension of any state, and yet they’re going to come to market and borrow money.”
Last month, the Fix Our Roads Coalition, “rolled out its own proposal for a bipartisan solution called the Roadmap to Consensus. The plan, made up of proposals already floated by lawmakers and by the governor, attempts to appease both sides of the aisle with a variety of reforms and revenue solutions. It includes reforms of laws regarding environmental impact reviews and state agencies that Republicans have pushed for, as well as new revenues Democrats have asked for.”
“She said Puerto Rico is looking for a permanent solution to the debt crisis. It doesn’t want to have to come back in five years and seek another debt restructuring. Puerto Rico is seeking an approach to its debt that would allow it to use 15% of its revenues each year for debt service. It will seek to use a cash flow approach to deal with its pensions rather than to build up the pension fund assets to actuarially required levels.”