Fixed income

Issuance of Build America Bonds fell precipitously last month, but overall volume still managed to outpace market issuance in July 2009, according to preliminary data from Thomson Reuters.

Rate Climate Spurs Fewer Waivers.

House Ways and Means Committee chairman Sander Levin Wednesday introduced a new bill that enables Congress to make another attempt at extending several bond provisions slated to expire at the end of the year, including Build America Bonds.

Buoyed by the strength of the long-term municipal market over the past 18 months, mutual fund assets have climbed to record levels, and portfolio managers have had little need to make major changes to their current investment strategies.

The Municipal Securities Rulemaking Board is wrestling with how much it needs to increase its staff, technological capability, and funds to implement provisions of the new financial regulatory reform law that require it to make the most expansive changes since its creation in 1975.

The legislation by Rep. Scott Garrett, R-N.J., would establish a regulatory framework for covered bonds, including a regime to handle the failure of a bond issuer.

House Ways and Means Committee chairman Sander Levin plans next week to unveil new jobs legislation that would extend Build America Bonds and other muni bond initiatives that are set to expire at the end of the year.

Even as Build America Bonds continue to transform municipal finance, one thing stays constant: hedging a portfolio of muni securities remains very difficult.

WASHINGTON — The Municipal Securities Rulemaking Board is considering temporarily expanding its 15-member board, possibly by two to four members, as it transitions to majority-public membership by Oct. 1 to comply with the new financial regulatory reform law.

George Friedlander has rejoined Citigroup as head of municipal strategy.

Two new Standard & Poor’s indexes tracking municipal bonds launched yesterday, paving the way for Vanguard to enter the municipal exchange-traded fund business.

Municipal bond mutual funds’ assets climbed to a new record total as they continue to command new money from investors in spite of low yields and a nonstop wave of bad headlines in the mainstream press over state and local government credit.

The growing investor acceptance of taxable municipal bonds over the past year appears to have hit a stumbling block.

Thomas G. McLoughlin is stepping down from his role as president and chief executive officer at National Public Finance Guarantee Corp. to join UBS Financial Services as head of its municipal research division.

Municipal bond mutual funds last week rebounded from a brief spell of cash leakage with the biggest influx of new money in four months.

Shorter Maturities, BAB Advantages

Build America Bonds have begun to reshape long-term taxable bond indexes that until now included little state and local government debt.

Closed-end municipal bond funds continue to enjoy shelter from the turbulence plaguing the rest of the sector.

Citi and Bank of America Merrill Lynch continue to vie for the top underwriting position in the municipal bond industry, according to mid-year rankings from Thomson Reuters.

Investment advisers may face tough compliance issues in the wake of the Securities and Exchange Commission's unanimous adoption last week of rules designed to prevent IAs from making political contributions to elected officials to obtain business from state and local pension funds, investment pools and college-savings accounts.