Deal Funds Settlement for Flint

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Deal Funds Settlement for Flint Vol. 393 No. 35502 N.Y., N.Y. THE DAILY NEWSPAPER OF PUBLIC FINANCE Thursday, April 29, 2021 THURSDAY Bonds Role Deal Funds www.bondbuyer.com In Equity THE REGIONS Settlement MUNICIPAL SECONDARY TRADING showed a touch of weakness Discussed for the third day Wednesday BY SARAH WYNN as end-of-month repositioning For Flint and the May 15th tax dead- Municipal bonds have a signifi- line looms while New Jersey’s cant role to play in achieving racial BY YVETTE SHIELDS transportation deal was a blow- equity as investors’ appetites grow out. 2 for social impact bonds. Michigan will issue up to $700 A subcommittee of the House million of taxable private activ- WEB EXCLUSIVES Financial Services Committee ity bonds with Citigroup Global LEADERS: CHRISTOPHER JUMPER OF heard from muni stakeholders on Markets Inc. and Siebert Williams Assured Guaranty, Pat McCoy Wednesday regarding how the Shank & Co. LLC at the helm to of the New York Metropolitan muni market could address dis- fund a settlement that resolves liti- Transportation Authority, parities within itself. Specifically, Bloomberg News gation over the Flint water contam- and Tom Kozlik of Hilltop lawmakers discussed a study that ination crisis. Securities discuss how the found that historically Black col- Rep. Al Green, D-Texas, who led the House committee hearing, said Gov. Gretchen Whitmer and leges and universities pay more in some findings were “deeply troubling” to him. Attorney General Dana Nessel municipal bond market fared issuance fees than non-HBCUs. first announced the outline of set- after a year in pandemic con- “These findings are at once both nance professor at the University ever, he found that when HBCU tlement plans in August after 18 ditions. deeply personal and profoundly of Southern California, found that bonds are traded, it takes about months of negotiations. troubling,” said Rep. Al Green, HBCUs pay more in issuance fees 23% longer to find a willing buyer. It provides $600 million to set- A FORMER MORGAN STANLEY BROKER D-Texas. compared to non-HBCUs. HBCUs “Due to tax reasons, municipal tle claims for its role in the deba- will pay $5,000 in fines In a 2018 report — “What’s in pay about 20% more in fees to un- bonds offer the largest advantages cle that followed Flint’s move to after the Financial Industry a (school) name? Racial discrim- derwriters and that goes up to as to investors residing in the same switch its water source in 2014 Regulatory Authority found he ination in higher education bond much as 30% for schools in the state as the issuer,” Parsons said. while under state emergency man- bought and sold customers’ markets” — Chris Parsons, fi- deep South with historically high “What this means is that HBCUs, agement. The city failed to treat the securities without their con- levels of racial animus. by virtue of being located mostly in water properly leading to lead poi- sent, a practice the firm didn’t Parsons collected data on 4,145 the American South and Southeast, soning. Other lawsuits tied to the allow at the time. Constantinos WEDNESDAY’S YIELDS college-issued municipal bond of- may face collective reluctance from crisis are still pending as are state Maniatis agreed this week to what should be their most receptive The Bond Buyer 40 ferings between 1988 and 2010, criminal charges against former pay the fine and be suspend- 102 of which were conducted by investor base.” Gov. Rick Snyder and two former ed for 30 days while neither 5.0 HBCUs. “What we found in the paper is emergency managers. admitting nor denying FINRA’s 4.2 To Maturity Parsons found on average that that the institutions in these states State lawmakers late last year findings. 3.45 Unchanged HBCU-issued bonds appeared to where HBCUs are disproportion- signed off on the annual appropria- 3.4 trade at somewhat lower prices than ately located similarly seem re- tion of $35 million to cover annual To Par Call OFFICIAL FIGURES THAT THE CENSUS similar non-HBCU bonds, though luctant to have these bonds as part debt service for up to 30 years on 2.6 1.98 Unchanged Bureau released this week put not statistically significant. How- Turn to House page 3 Turn to Michigan page 3 Puerto Rico’s population on 1.8 April 1, 2020 at 3.29 million, 1.0 about a quarter-million people 04/15 04/20 04/23 04/28 more than the estimate the Legal Settlement a Consolation for Myrtle Beach Puerto Rico Oversight Board 5.5 BY CHIP BARNETT used to put together its fiscal 5.0 plan for the territory. 4.5 Myrtle Beach and six other 4.0 municipalities in Horry Coun- ILLINOIS’ TALLY OF UNPAID STATE 3.5 bills hit a years-long low of ty, South Carolina, will benefit 3.0 from a judge’s ruling that shifts $3.5 billion this week, state 2.5 about $30 million of revenue Comptroller Susana Mendoza 2.0 from the county to the local told rating agencies in a fiscal 1.5 governments. update as the state awaits an AMFJDNOSAJJM A South Carolina state judge infusion of federal aid. Complete market coverage appears on page 2 on April 16 ratified an Octo- ber 2020 settlement of a suit filed by Myrtle Beach and the other municipalities against Horry County. The suit alleged the county repealed a resolution on hospitality taxes without the consent of the city. The added revenue is a cred- it positive for Myrtle Beach Bloomberg News and the other municipalities, Moody’s Investors Service People sit at a pier in Myrtle Beach, South Carolina, this month during Turn to Settlement page 16 spring break season. The pandemic took a bite out of tourism. 001_BB042921 1 4/28/2021 4:57:08 PM Market News Thursday, April 29, 2021 2 The Bond Buyer N.J. a Blowout; Inflows Continue, But Weaker Tone Persists Municipal secondary trading showed a relative basis, and the progress When asked if the Fed would raise rates a touch of weakness for the third day as and you can tell in vaccinating if inflation increases before the labor mar- end-of-month repositioning and the May because coupon the public, the ket reaches full employment, Powell said, 15th tax deadline looms while New Jersey's spreads are al- Federal Open “It seems unlikely we would see inflation transportation deal was a blow out and ICI most non-exis- Market Commit- while there’s so much slack in the employ- reported another week of multi-billion in- tent.” tee held rates at ment market. flows into municipal bond mutual funds. Investors con- the zero lower “Powell wriggled out of that by stating Municipals exhibited a cautious tone tinue to pour bound and will he expects expectations to rise only af- Wednesday heading into the Fed’s an- money into continue asset ter actual inflation has increased, which nouncement that it would keep rates steady the funds with purchases at cur- of course ignores the inflation already for the near term and the pricing of the the Investment rent levels, stick- evident outside of CPI (or PCE),” said $1.57 billion New Jersey Transportation Company Insti- BY CHRISTINE ALBANO & GARY SIEGEL ing to its stance Markus Schomer, chief economist at Pine- Trust Fund deal, which was oversubscribed tute Wednesday that recovery is Bridge Investments. “This is the biggest by as much as 20 times and repriced to reporting another “far from com- weakness in the Fed’s framework. Peo- lower yields, was the day's focus. week of inflows with $2.517 billion com- plete,” and inflation will be “transitory.” ple’s inflation expectations are driven by At the conclusion of the FOMC's two- ing into long-term municipal bond mutual “Amid progress on vaccinations and a broader sense of price movements while day meeting Wednesday, Chairman Jerome funds, after $2.289 billion the previous strong policy support, indicators of eco- the Fed concentrates on a narrow corner of Powell confirmed the Fed's intention to week. This is the seventh week of inflows nomic activity and employment have the inflation backdrop.” keep rates and its monthly bond buying pro- with only one week of outflows so far in strengthened,” the post-meeting statement Powell wouldn’t define how many gram steady, which was largely expected. 2021 and a total of more than $33 billion noted, including “sectors most adversely months would be a “string” of good em- “The muni market seemed to be oper- for the year. affected by the pandemic,” which “remain ployment readings, he noted there has ating with little to no concern over this ICI also reported $450 million of in- weak but have shown improvement.” been one and more would be needed for week’s FOMC policy meeting as bench- flows into exchange-traded funds for the The statement also said, “risks to the the Fed to take notice. mark tax-exempt yields held steady versus week ending April 22. In the previous economic outlook remain.” Last time, the “The Fed cannot acknowledge the a softer tone for Treasuries,” said Jeffrey week, ETFs saw $505 million of inflows. FOMC termed risks as “considerable.” strong, record-breaking economy without Lipton, head of municipal credit and mar- “We have seen positive bond inflows for “The Fed is sounding decidedly more starting the tapering or policy normaliza- ket strategy and municipal capital markets 48 of the last 49 weeks, which has given upbeat on the economy but is in absolutely tion debate,” Schomer said, adding “it at Oppenheimer & Co.
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