Fixed income

Issuers priced $23 billion in junk bonds in August, the seventh largest monthly U.S. high yield volume on record, according to Dealogic.

A National Bureau of Economic Research study has concluded that while Build America Bonds have succeeded in their mission to lower financing costs for state and local governments, traditional tax-exempt bonds still offer more enticing after-tax yields to individual investors.

Moody’s Investors Service is pushing state and local issuers to agree to indemnify and hold it and its officers harmless for any mistakes they might make as a precondition to assigning ratings on municipal bond transactions, market participants said Thursday.

The vast majority of early Build America Bond subsidy payments were processed in a timely and accurate manner during the first five months of the program, with no evidence of fraud or errors, according to a new report.

One of the Obama administration’s priorities is to get Congress to extend the Build America Bond program and federal officials are convinced BABs will remain a “vibrant market” even if the federal subsidy rate is reduced from its current 35% level, a Treasury Department official said ­Monday.

An overwhelming majority of Build America Bond subsidy payments have been paid in full to BAB issuers, suggesting that concerns about offsets are dramatically overblown, according to new data on state issuers compiled by the IRS.

When asked whether municipal bonds can continue their record-setting ways, one of the most common refrains from market participants is: "why not?"

The Congressional Budget Office Thursday upped the estimated cost of the Build America Bond program by $10 billion to $36 billion over 10 years in its new estimates on the fiscal 2010 budget deficit and economic outlook.

The new municipal underwriting group at U.S. Bancorp Investments continues to expand its ranks, adding Leon Bijou as the group's in-house legal counsel last week and securing Bill Bingham to oversee fixed-rate trading this fall.

The Securities and Exchange Commission today for the first time charged a state–New Jersey–with violating securities fraud laws by failing to disclose to bond investors that it was underfunding its two largest pension plans.

The Municipal Securities Rulemaking Board Tuesday said it is contemplating a rule change that would prohibit dealers from underwriting new negotiated or competitive bond issues if they served as the issuer's financial adviser on the transaction.

Retail demand for municipal bonds continued to surge last week as mutual funds that invest in state and local government debt posted their second biggest weekly inflow of the year.

Martin Kanefsky, the former owner and chief executive officer of a Great Neck, N.Y.-based firm that helped municipal issuers secure guaranteed investment contracts for their bond proceeds, pleaded guilty to participating in two separate fraud conspiracies as well as wire fraud, the Justice Department announced Thursday night.

Since the beginning of the year, Wall Street firms, trade associations, and municipal bond issuers have significantly stepped up their lobbying efforts to get lawmakers to extend the Build America Bonds program before it expires at the end of December.

Four major municipal market groups are urging the Treasury Department to issue guidance confirming that the existing regulatory framework on issue price for tax-exempt bonds also applies to Build America Bonds and stating that if issuers follow certain long-standing practices, they can be confident they are complying with the rules in this area.

As the State of Wisconsin Investment Board continues a push toward risk aversion, its staff laid out new goals for the fixed-income portfolio that would look to find additional alpha minus any apparent investment hazard.

Treasury panel offers its take.

Charles Schwab announced on Thursday three new, low-cost bond exchange-traded funds with no online trading commissions for Schwab clients.

Natalie Cohen was hired to study muni bonds as head of the research and economics department.

While Build America Bonds have limited the supply of tax-exempt issuance, strong demand from retail investors is also playing a vital role in lowering issuers’ borrowing costs to historic lows.