International Bridge, Tunnel and Turnpike Association (IBTTA) Presentation Financing Options in an Uncertain World Chris Mier Municipal Strategist April 12, 2011 Hyatt Regency, Jersey City F
Ability of the Tax Exempt Market to Absorb Volume without BABs We have a good sense of supply, but what has happened to demand? 30,000 30 Day Visible Supply ($ Million) 25,000 20,000 15,000 10,000 5,000 0 Price (Low Yield) S 1 S 0 D 0 D 1 Lower Yields Volume 2
Forecasts of Municipal Volume for 2011 Most forecasts at between $325 and $375 billion Why did we miss it by so much? 3
Ten Years of Volume 500 450 400 350 300 250 200 150 100 50 0 Q1 NEW ISSUE VOLUME ($ Billion) 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2011 Q1 clearly not simpatico with history, but why? 4
The Political Milieu Issuers strike reflects new political reality of Less, not More 5
18 Weeks of Redemptions 8.00 Weekly Muni Mutual Fund Inflows ($ Billion) 6.00 4.00 2.00 000 0.00 2.00 4.00 6.00 600 8.00 Fund flows are out of muni bond funds and into equity funds This suggests that demand will be lower for a reasonable length of time (asset re-allocation) 6
Ratios 110% 105% 100% 95% 90% 85% 80% 75% 70% 10 Year Muni/Treasury Ratio Cheap and likely to stay that way 7
Outlook Liquidity will be there for the best rated issuers Liquidity cannot be guaranteed 8
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