The market remains strong this month. New deals are getting done with strong demand. From a supply standpoint, according to The Bond Buyer, 30-day visible supply is roughly $6.8 billion, an increase of almost $1 billion. It is comprised of $4.4 billion of negotiated sales and $2.5 billion of competitive sales.
1861 Capital: Investigation, An Analysis of Municipal Bonds.
1861 CapitalLosses due to default on municipal debt have been rare, particlalry when compared to other fixed income asset classes. There are basically two types of municipal debt; a) General Obligation debt is secured by a pledge from a state or local government to use tax revenues inorder to pay interest and principal on the bond and b) Revenue Bond is secured only by the revenues from a particular project. For example, the construction of a toll road could be financed either using General Obligation bonds or using revenue bonds. If the road were financed using revenue bonds, then the bonds would be secured only by toll revenue. With respect to General Obligation bonds, in many states, General Obligation debt service is placed "senior" to other obligations by statute or constitution, making defaults on US state debt unlikely. Illinois state law, for instance, dictates that monthly revenues be allocated first for G.O. debt service requirements, which represents a strong protection for bondholders. Historically, losses in investment grade municipal bonds are limited. Investors recieve par at maturity, limiting gains.
1861 Capital Treasury Bonds
1861 Capital generally invests in US municipal bonds which are not Treasury bonds, although there are some similarities. Treasury bonds are negotiable, coupon-bearing debt obligations issued by the U.S. government. They are backed by the US Government’s full faith and credit, having a maturity typically of more than 7 years. Interest is paid semi-annually. Treasury bonds are exempt from state and local taxes. They are federally taxable. They are a safe asset class and investors generally buy Treasury bonds with limited loss expectations but also with muted gain expectations. Municipal bonds pay interest semi-annually and in most cases the interest is free from federal taxation. Because municipal projects are more long term in nature, the maturity is often more than 20 years.
1861 Capital Management
From 1861, Capital Management in the U.S. changed due to the federal income tax. Among the four "factors of production," which also include land and labor, capital and management determine the wealth of an entity, be it a person, a company or a country. One hundred years after 1861, capital is viewed more broadly, and the use of terms such as "human capital" and "knowledge capital" have come into common usage. Financial, Public, Natural and even Spiritual capital have been defined and discussed in human development and modern economic academia.