The Municipal Bond Market – A Fascinating Read – Really!

The other day someone I follow on Twitter, @ConstructionPM, posted a link to an article written about the state of the current Municipal Bond Market. Normally, I suppose this would make for a dry read. But this article resonated with me. Bonding is important to me as an engineer, because I can’t build anything if there is no money to pay for it. And bonding is one of the more typical methods used to secure funding. Few small cities have several million dollars lying in the city treasury.

After more than 15 years of dealing with municipal bonds, our city has noticed much of what was discussed in this article. The dropping away of the companies that back the bonds with insurance. The raising of interest rates. The hesitation to finance the larger bonds. The thought had gone through our minds, what is wrong with us? Yes, the economy is bad, but come on, these are municipal bonds. Well, now I have a much better picture. This is going on all over the country. And probably hitting cities most that are located in states where the state has some bonding issues of their own. (I probably don’t have to tell you what condition our state’s finances are in.)

So I post this for all of you who might also have experienced this strange ripple in the Municipal Bond Market. Another good example of how social media is helping us all to share vital information, and therefore allow us to make better choices in our decisions at work.

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Mark Danielson

Wow Pam, great article.

“For a while, things are going to be different,” said MacGillivray, (Dave MacGillivray, a principal with Springsted Inc., an investment advisory firm in St. Paul that counsels hundreds of city, county, school district and other government clients,) in part because he and other sources believed the bond market was not yet done with surprises. “Nobody knows how this is going to play out. … There were big shocks to a market that doesn’t deal (often) with shocks.”

The bond market tightening is nationwide. I printed the article for our Finance Director – Thanks!