Tag: Bond Buyer

PREPA bond parties make offer and file suits

Mary Pat Campbell

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202311131617SM______BNDBUYER_0000018b-ca27-d799-afbf-dbf739470092_110.1

Excerpt:

Puerto Rico Electric Power Authority bond parties that oppose the Oversight Board’s proposed debt deal filed suits challenging part of the deal, asked for compensation for Puerto Rico central government’s actions since March 2022 and proposed an alternate bond deal.

The parties filed the suits this weekend in the U.S. District Court for Puerto Rico and filed an informative motion Friday in the bankruptcy telling U.S. District Judge Laura Taylor Swain about their bond deal offer.

GoldenTree Asset Management and Syncora Guarantee sued Puerto Rico’s central government for actions taken since March 2022 to interfere with PREPA’s ability to pay bondholders. The court has yet to appoint a judge in that case.

The bond parties allege the commonwealth government has manipulated PREPA’s fiscal plans and budgets to deprive the bondholders of their claim on the authority’s revenues and depress the value of the bonds.

The board rejected former Oversight Board member Justin Peterson’s suggestion to use commonwealth financial surpluses for PREPA because the commonwealth didn’t owe the authority money.

Author(s): Robert Slavin

Publication Date: 13 Nov 2023

Publication Site: Fidelity Fixed Income/Bond Buyer

Moody’s cuts D.C. rating outlook to match U.S.; holds steady on Florida, Maryland, Virginia

Mary Pat Campbell

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202311131727SM______BNDBUYER_0000018b-c9ff-d00d-ad8b-ebff49580002_110.1

Excerpt:

Moody’s Investors Service (MCO) revised its rating outlook for the Aaa-rated District of Columbia to negative Monday, matching its Friday action on the United States government.

At the same time, the rating agency affirmed the Aaa issuer ratings and stable outlooks of Florida, Maryland and Virginia.

The actions follow Friday’s outlook revision on the United States to negative from stable by Moody’s while it affirmed the U.S. sovereign rating at Aaa.

Moody’s said the main reason for the negative outlook on the United States was its assessment that “the downside risks to the U.S.’ fiscal strength have increased and may no longer be fully offset by the sovereign’s unique credit strengths.

“In the context of higher interest rates, without effective fiscal policy measures to reduce government spending or increase revenues, Moody’s expects that the U.S.’ fiscal deficits will remain very large, significantly weakening debt affordability,” the rating agency said. “Continued political polarization within U.S. Congress raises the risk that successive governments will not be able to reach consensus on a fiscal plan to slow the decline in debt affordability.”

Author(s): Chip Barnett

Publication Date: 13 Nov 2023

Publication Site: Fidelity Fixed Income – Bond Buyer

SEC attempts to calm muni market over FDTA implementation

Mary Pat Campbell

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202311101249SM______BNDBUYER_0000018b-ba22-dd16-addf-fb6af3660001_110.1

Excerpt:

As the timeline for implementing the Financial Data Transparency Act grows shorter, the Securities and Exchange Commission is teaming up with other federal regulators in an attempt to allay fears about implementation.

“There’s no new disclosure requirements, standards or timelines, it’s just about structured data,” said Dave Sanchez, director of the SEC’s Office of Municipal Securities.

The comments came during a panel discussion produced by XBRL US on Thursday. The FDTA was passed last year as a remedy for providing more transparency to the financial markets by introducing machine-readable formats into the Municipal Securities Rulemaking Board’s EMMA system, which tracks the muni market.

The SEC is in charge of developing the standards for how the data will be submitted to the MSRB. The upcoming deadlines include publishing proposed rules by June 2024, which will kick off the public comment period. Determining the standards is set for December 2024, with specific rulemaking to be in place by 2026.

Author(s): Scott Sowers

Publication Date: 10 Nov 2023

Publication Site: Bond Buyer at Fidelity Fixed Income

Upgrade will help Chicago navigate a thornier bond market

Mary Pat Campbell

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202210251432SM______BNDBUYER_00000184-0fdf-d34d-a3d7-5fff818a0000_110.1&utm_source=Wirepoints+Newsletter&utm_campaign=845146e7cd-RSS_EMAIL_CAMPAIGN&utm_medium=email&utm_term=0_895ee9abf9-845146e7cd-30506353#new_tab

Excerpt:

Last week’s Fitch Ratings upgrade of Chicago offers dual benefits for Mayor Lori Lightfoot’s administration as it pursues passage of a proposed 2023 budget and preps a general obligation issue.

Fitch’s Friday upgrade to BBB from BBB-minus, the city’s first from Fitch in 12 years, and the potential for more good rating news could help sell the City Council on supplemental pension contributions and other pieces of the budget plan viewed favorably by analysts.

The Fitch action and an overall rosier view of the city’s fiscal condition should also broaden the investor appeal of an upcoming $757 million general obligation issue in a more fickle and tumultuous market than prevailed in the city’s last GO offering in late 2021.

Author(s): Yvette Shields

Publication Date: 25 Oct 2022

Publication Site: Fidelity Fixed Income

What Illinois didn’t tell you about its celebrated early payment of federal loan – Wirepoints

Mary Pat Campbell

Link: https://wirepoints.org/what-illinois-didnt-tell-you-about-its-celebrated-early-payment-of-federal-loan-wirepoints/

Excerpt:

In fact, the state originally did intend to pay off the Federal Reserve loan with other federal bailout money from ARPA, the American Rescue Plan Act, according to The Bond Buyer. But the “Treasury threw a wrench in repayment prospects” when the initial federal guidance barred the use of ARPA aid for debt repayment. “The state lobbied for a change in a letter to Treasury Secretary Janet Yellen. But as state tax collections turned rosier, state leaders opted instead to cover repayment with tax collections,” says The Bond Buyer.

The bottom line is that all of us, as federal taxpayers, will bear the cost of the federal bailout, for Illinois and other states, whether through higher taxes to repay the Treasury or inflation created by Federal Reserve money creation. And Illinois will be worse off because only Illinois borrowed extra and incurred interest costs.

So, no, Governor Pritzker, paying back this loan ahead of schedule doesn’t mean Illinois achieved a “level of fiscal prudence not seen in our state for decades.”

Author(s): Mark Glennon

Publication Date: 7 Jan 2022

Publication Site: Wirepoints

NYC should bolster rainy-day fund, DiNapoli urges

Mary Pat Campbell

Link:https://www.bondbuyer.com/news/nyc-should-bolster-rainy-day-fund-dinapoli-urges

Excerpt:

Incoming New York Mayor Eric Adams has already heard calls from watchdog groups to boost New York’s new rainy-day account and fine-tune the policies controlling deposits and withdrawals.

New York’s mechanisms are less defined than other U.S. cities’, state Comptroller Thomas DiNapoli said in a report Wednesday. DiNapoli urged city officials to tap recent changes in state and local laws enabling accumulation and use.

Following voter approval of a charter revision in November 2019 and state legislative signoff, city officials established a rainy-day fund — formally the revenue stabilization fund — in February 2021. That made available $499 million in resources that the city could not use to balance its fiscal 2020 budget.

Author(s): Paul Burton

Publication Date: 10 Nov 101`

Publication Site: Bond Buyer

Judge: Pension fund can’t claim Harvey, Illinois’ federal ARPA aid

Mary Pat Campbell

Link: https://www.bondbuyer.com/news/judge-pension-fund-cant-claim-harvey-illinois-federal-arpa-aid

Excerpt:

A state judge refused to block distribution of Harvey, Illinois’ share of American Rescue Plan Act federal coronavirus aid relief funds after rejecting a pension fund’s claim to the money.

The financially stressed Chicago suburb, which has battled over the last decade with its public safety pension funds, Chicago, and bondholders over its obligations, settled a legal dispute in 2018 with its police and firefighters’ pension funds over past due payments. The settlement gives the funds a share of various funding that flows through the state government.

The firefighters’ fund recently sued Harvey to stake a claim to the ARPA money, arguing it is subject to the 10% claim on city tax and aid funds that are sent directly to the pension fund under the 2018 settlement. The fund asked the court to enjoin Comptroller Susana Mendoza, whose office manages the state’s pension intercept program, from distributing any funds until the case was argued.

Author(s): Yvette Shields

Publication Date: 28 June 2021

Publication Site: Bond Buyer

Illinois looks to its own coffers to pay off MLF loan

Mary Pat Campbell

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202105211243SM______BNDBUYER_00000179-8fa2-d80e-a97d-8fa3c5720001_110.1#new_tab

Excerpt:

Illinois will dip into its growing pot of tax revenues to pay off the remaining $2.175 billion of outstanding debt borrowed through the Federal Reserve?s Municipal Liquidity Facility to manage last year?s COVID-19 tax blows.

The Treasury Department?s interim guidance, released May 10, barring debt repayment as an eligible use of American Rescue Plan dollars threw a wrench ? at least temporarily ? into Chicago’s and Illinois? plans to pay down debt issued last year. Illinois borrowed through the MLF and Chicago issued notes ahead of a planned scoop-and-toss borrowing to stave off deep cuts and layoffs as tax revenues plummeted. Both planned to pay off the debt with ARP funds.

Both planned to lobby the Treasury Department for a guidance change during a 60-day comment period, but Illinois was under the gun to make repayment plans ahead of a May 31 deadline to pass a fiscal 2022 budget. The state is receiving $8.1 billion from the ARP.

Author(s): Yvette Shields

Publication Date: 21 May 2021

Publication Site: Fidelity Fixed Income

Providence is ready to roll the dice on a pension bond

Mary Pat Campbell

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202105211039SM______BNDBUYER_00000179-8608-ddb0-adf9-ff4cb4b00001_110.1

Excerpt:

Red flags waved as Providence Mayor Jorge Elorza proposed issuing $704 million in pension obligation bonds to deal with a pestering unfunded liability problem in Rhode Island’s capital city.

The amount exceeds the city’s annual operating budget. Bond markets often frown on such borrowing and sentiment among state officials who must sign off is uncertain. Skeptics also call the city’s fiscal management track record shaky, while memories linger of a fiasco in Woonsocket, which tried a similar move nearly 20 years ago.

Author(s): Paul Burton

Publication Date: 21 May 2021

Publication Site: Fidelity Fixed Income

Harvey, Illinois’ ARP relief dragged into pension fund conflict

Mary Pat Campbell

Link: https://www.bondbuyer.com/news/harvey-illinois-arp-relief-dragged-into-pension-fund-conflict#new_tab

Excerpt:

A Harvey, Illinois, pension fund claims it’s entitled to share in the Chicago suburb’s American Rescue Plan funds and wants to block the distribution of aid until a judge decides.

The financially stressed suburb south of Chicago, which has battled over the last decade with its public safety pension funds, the city of Chicago, and bondholders about its obligations, settled a legal dispute with its police and firefighters’ over past due payments in 2018.

The Firefighters Pension Fund is now staking a claim on Harvey’s share of the $350 billion for local, state and tribal governments in the coronavirus relief package President Biden signed in March, arguing Harvey’s share is subject to the 10% claim on city tax funds that flow through the state and are sent directed to the fund the city agreed to in a 2018 settlement.

Author(s): Yvette Shields

Publication Date: 14 May 2021

Publication Site: Bond Buyer

No rating red flags stand out in Illinois’ proposed budget

Mary Pat Campbell

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202102191505SM______BNDBUYER_00000177-bb7c-d32d-a5f7-bbfd87c10001_110.1#new_tab

Excerpt:

The prospects for new federal aid and a proposed budget that avoids negative rating triggers should preserve Illinois? investment-grade status, but neither moves the needle on the structural and pension albatrosses.

Gov. J.B. Pritzker’s proposed $95.5 billion fiscal 2022 budget, with a $41.7 billion general fund, clears what was estimated late last year as a $5.5 billion gap, using higher revenue projections and a combination of structural and one-time maneuvers.

In addition to higher tax collections and federal Medicaid matching dollars now expected, the budget holds spending level to fiscal 2021. It raises about $900 million in revenue by curbing corporate tax breaks, keeps some funds earmarked for local governments, the capital fund, and transit agencies and delays repayment of some inter-fund borrowing. It does not rely on an income tax or other general tax increases and it does rely on more federal funds as they are not yet approved.

Author(s): Yvette Shields

Publication Date: 19 February 2021

Publication Site: Fidelity Fixed Income

Illinois sports agency’s new board chief inherits coronavirus-driven debt woes

Mary Pat Campbell

Link: https://fixedincome.fidelity.com/ftgw/fi/FINewsArticle?id=202101251510SM______BNDBUYER_00000177-3a79-d154-a1f7-7ef9935b0001_110.1

Excerpt:

Illinois Gov. J.B. Pritzker tapped incumbent Illinois Sports Facilities Authority board member Leslie Darling to replace outgoing chairman Manuel ?Manny? Sanchez, putting her at the helm of the agency hit hard by the COVID-19 pandemic?s deep wounds to hotel taxes, which are used to repay its debts.

The board governs the agency that owns and operates and issued $150 million of bonds in 1989 for Guaranteed Rate Field where Major League Baseball?s White Sox play and served as the issuer for $400 million of 2001 bonds that financed the renovation of the Chicago Park District-owned Soldier Field ? home of the National Football League?s Chicago Bears. About $430 million of debt is outstanding.

Author: Yvette Shields

Publication Date: 25 January 2021

Publication Site: Fidelity Fixed Income