Munis In Transition?

States will go broke, Jim

'Broke' comes in all shapes and sizes

Eric

The technical setup in muni bonds, despite the assurances from various experts, suggests a market in transition. Do you recall similar setups and assurances for Enron, Fannie Mae, sub-prime and Alt-A mortgages, credit swaps, PIIG debt, etc? While history rarely repeats, it almost always rhymes. The technical structure of the "bounce(s)" after the initial crash often reveals depth of the damage. Munis warrant a space within the data feed in the coming months.

iShares National Muni Index ETF:


Headline: Moody’s to Include Unfunded State Pension Liabilities, NYT Says

By James Kraus - Jan 27, 2011 1:17 AM ETinShareMorePrintEmailMoody’s Investgors Service plans to include unfunded pension liabilities into its credit rating for U.S. states’ debt, the New York Times reported, citing Robert Kurtter, managing director for public finance at Moody’s.

States haven’t included those liabilities until now, prompting growing unease among investors in municipal bonds, the newspaper said.

The new system will be comparable to the way Moody’s now rates corporate and sovereign debt, the newspaper said. States with the highest total indebtedness include Connecticut, Hawaii, Illinois, Kentucky, Massachusetts, Mississippi, New Jersey and Rhode Island, as well as Puerto Rico, the Times reported.

Source: bloomberg.com