Fixed income

State and local budget challenges will put pressure on municipal credits and will drag overall economic growth next year, according to the Securities Industry and Financial Markets Association’s semiannual economic projections released Monday.

Nearly $500 million added in week ended Dec. 1, partially reversing the $1.85 billion that walked out the door the previous week.

The Securities Industry and Financial Markets Association has upped the ante in its dispute with the Municipal Securities Rulemaking Board over the self-regulator’s proposal to nearly double the fees it collects from dealers, warning that the MSRB must do a better job of explaining the need for the increase.

The municipal bond underwriter and brokerage house hope the tandem will generate broader appeal for investors.

American Funds insists they were years in the making. Others see them as a tactic to stem outflows.

James Hertz, a former vice president and marketer in JPMorgan’s municipal derivatives group, pleaded guilty Tuesday to three criminal counts for engaging in bid-rigging and fraud conspiracies connected with guaranteed investment contracts and other municipal finance agreements, the Justice Department announced.

Issuers in four states have ­accounted for nearly half of the $164 billion of Build America Bonds issued since the ­program’s inception 19 months ago. Municipal market participants say the lopsided ­distribution should be a consideration for investors, but for others the unbalance has limited value in measuring the program’s success.

The ­Securities and Exchange Commission would violate the Tower Amendment and the principles of federalism if it applies its proposed rules on asset-backed securities to municipal bonds, 14 market groups warned this week.

The optimal combination of high corporate bond yields and budding investment returns for defined benefit plans was not evident in this year’s third quarter, as pensions’ worldwide saw an “offset of strong investment returns” due to the decline in yields, Towers Watson said.

The story in the municipal bond market this month has been bleak. The story in the municipal bond exchange-traded fund ­market has been even bleaker.

Many investors think the expiration of the Build America Bond program would actually be good for existing BABs because the entire universe of taxable bond buyers will be fighting over a finite and relatively small pool of available debt.

The SEC should rein in the ABA's CUSIP Service Bureau and prevent it from charging financial market participants unreasonable and unwarranted fees, say three trade groups.

Industry groups are urging the Securities and Exchange Commission to reject a proposal from the Municipal Securities Rulemaking Board to provide it with an additional $17 million in revenue annually by nearly doubling the amount of transaction fees it collects from dealers.

The company cited $1.6 billion of debt as of June 30.

With investors still trying to heal from the economic crisis that tore through the global economy, many are pouring their dollars into bond funds. But there are still challenges going forward and many need help navigating their options, said investment experts and fund managers from The Hartford at a luncheon in New York City Tuesday.

Build America Bonds have entered a world of their own. As the market braces for a blitz of taxable state and local government debt sales to close out the year, some experts expect the already-shaky correlations between BABs and other assets to break down.

Bond funds attract $5.31 billion of new money in the week.

RBC Capital Markets plans to announce Wednesday that Francisco Gonzalez has joined its municipal finance group to focus on large issues.

Build America Bond issuers could potentially go years without subsidy payments under the examination process the Internal Revenue Service is currently considering for them, bond attorneys meeting here warned last week.

Issuers that want to avoid disclosure mishaps — and possible federal enforcement action — should develop and closely follow policies as well as procedures that lay out who must review and sign off on their disclosure documents, Securities and Exchange Commission officials are stressing.