There is the potential for US Municipals to become even more attractive to taxable US investors:
Congressional Democrats are seeking to expand funding for airport runways, housing projects and sewage-treatment plants through a new tax break for municipal bondholders.
The proposal is designed to make so-called private-activity bonds more attractive by exempting the interest on them from the alternative minimum tax. Richard Neal, chairman of the House Ways and Means subcommittee that drafts tax measures, wants to include the plan in economic recovery legislation that President-elect Barack Obama has made a top priority.
A crazy idea; if implemented it will simply increase distortions in the capital markets.
Accrued Interest points out that Bad liquidity cuts both ways in municipals and the same thing is true (with slightly different mechanical details, of course) in preferreds.
Volume was down sharply to normal levels today and prices were up up UP!, providning one day’s worth of support for the hypothesis that tax loss selling was behind the recent weakness (as pointed out on Financial Webring Forum).
| Note that these indices are experimental; the absolute and relative daily values are expected to change in the final version. In this version, index values are based at 1,000.0 on 2006-6-30. The Fixed-Reset index was added effective 2008-9-5 at that day’s closing value of 1,119.4 for the Fixed-Floater index. |
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| Index | Mean Current Yield (at bid) | Mean YTW | Mean Average Trading Value | Mean Mod Dur (YTW) | Issues | Day’s Perf. | Index Value |
| Ratchet | N/A | N/A | N/A | N/A | 0 | N/A | N/A |
| Fixed-Floater | 8.39% | 8.44% | 137,984 | 12.28 | 7 | +2.2895% | 636.3 |
| Floater | 7.88% | 7.94% | 96,153 | 11.46 | 2 | +1.7925% | 413.6 |
| Op. Retract | 5.48% | 6.07% | 172,642 | 3.94 | 14 | +0.8365% | 996.0 |
| Split-Share | 6.51% | 11.47% | 94,035 | 3.95 | 15 | +2.6499% | 955.3 |
| Interest Bearing | 9.70% | 19.04% | 59,461 | 2.71 | 3 | +5.8627% | 774.1 |
| Perpetual-Premium | N/A | N/A | N/A | N/A | N/A | N/A | N/A |
| Perpetual-Discount | 7.84% | 7.95% | 250,379 | 11.49 | 71 | +4.0585% | 712.4 |
| Fixed-Reset | 5.99% | 5.00% | 1,049,173 | 14.90 | 18 | +1.3459% | 1,009.6 |
| Major Price Changes | |||
| Issue | Index | Change | Notes |
| BNS.PR.Q | FixedReset | +6.0212% | |
| CM.PR.J | PerpetualDiscount | +6.6421% | Now with a pre-tax bid-YTW of 7.81% based on a bid of 14.45 and a limitMaturity. Closing quote 14.45-50, 1×2. Day’s range of 13.74-44. |
| SLF.PR.E | PerpetualDiscount | +6.7146% | Now with a pre-tax bid-YTW of 8.51% based on a bid of 13.35 and a limitMaturity. Closing quote 13.34-74. Day’s range of 12.61-13.74. |
| PPL.PR.A | SplitShare | +6.8551% | Asset coverage of 1.4-:1 as of December 15 according to the company. Now with a pre-tax bid-YTW of 11.14% based on a bid of 8.09 and a hardMaturity 2012-12-1 at 10.00. Closing quote of 8.09-18, 10×2. Day’s range of 7.63-01. |
| POW.PR.D | PerpetualDiscount | +7.0656% | Now with a pre-tax bid-YTW of 8.47% based on a bid of 14.85 and a limitMaturity. Closing quote 14.85-89, 6×12. Day’s range of 14.39-91. |
| NA.PR.M | PerpetualDiscount | +7.3043% | Now with a pre-tax bid-YTW of 8.27% based on a bid of 18.51 and a limitMaturity. Closing quote 18.51-15, 3×1. Day’s range of 18.00-19.14. |
| RY.PR.G | PerpetualDiscount | +7.3171% | Now with a pre-tax bid-YTW of 7.22% based on a bid of 15.84 and a limitMaturity. Closing quote 15.84-99, 1×10. Day’s range of 15.21-75. |
| CM.PR.P | PerpetualDiscount | +7.6779% | Now with a pre-tax bid-YTW of 8.00% based on a bid of 17.25 and a limitMaturity. Closing quote 17.25-54, 2×9. Day’s range of 16.96-70. |
| SLF.PR.D | PerpetualDiscount | +8.3736% | Now with a pre-tax bid-YTW of 8.35% based on a bid of 13.46 and a limitMaturity. Closing quote 13.46-95, 1×7. Day’s range of 12.53-13.95. |
| WFS.PR.A | SplitShare | +8.8235% | Asset coverage of 1.2-:1 as of December 18 according to Mulvihill. Now with a pre-tax bid-YTW of 12.44% based on a bid of 8.51 and a hardMaturity 2011-6-30 at 10.00. Closing quote of 8.51-93, 20×1. Day’s range of 8.47-74. |
| RY.PR.A | PerpetualDiscount | +9.1405% | Now with a pre-tax bid-YTW of 7.07% based on a bid of 16.00 and a limitMaturity. Closing quote 16.00-17.10 (!) 6×10. Day’s range of 14.92-17.35 (!). |
| BNA.PR.C | SplitShare | +11.8265% | Asset coverage of 1.6+:1 based on BAM.A at 16.81 and 2.4 BAM.A per preferred. Now with a pre-tax bid-YTW of 20.00% based on a bid of 8.51 and a hardMaturity 2019-1-10 at 25.00. Closing quote of 8.51-00, 48×20. Day’s range of 8.00-9.00. |
| FIG.PR.A | InterestBearing | +13.8258% | Asset coverage of 1.0+:1 based on a capital unit NAV of 0.14 as of December 24 and 0.71 Capital Units per preferred. Now with a pre-tax bid-YTW of 17.33% based on a bid of 6.01 and a hardMaturity 2014-12-31 at 10.00. Closing quote of 6.01-49, 3×1. Day’s range of 5.85-25. |
| BAM.PR.J | OpRet | +15.5704% | Now with a pre-tax bid-YTW of 14.32% based on a bid of 13.88 and a softMaturity 2018-3-30. Closing quote of 13.88-20, 1×5. Day’s range of 13.00-14.00. |
| Volume Highlights | |||
| Issue | Index | Volume | Notes |
| CM.PR.H | PerpetualDiscount | 78,150 | TD crossed 47,600 at 15.33. Now with a pre-tax bid-YTW of 7.89% based on a bid of 15.25 and a limitMaturity. |
| CIU.PR.A | PerpetualDiscount | 42,400 | Nesbitt crossed two blocks of 15,000, both at 13.30. Now with a pre-tax bid-YTW of 8.79% based on a bid of 13.32 and a limitMaturity. |
| SLF.PR.E | PerpetualDiscount | 42,400 | TD crossed 30,000 at 13.74. Now with a pre-tax bid-YTW of 8.51% based on a bid of 13.35 and a limitMaturity. |
| BMO.PR.J | PerpetualDiscount | 30,336 | TD crossed 17,000 at 14.88. Now with a pre-tax bid-YTW of 7.79% based on a bid of 14.70 and a limitMaturity. |
| TD.PR.O | PerpetualDiscount | 24,175 | Now with a pre-tax bid-YTW of 7.33% based on a bid of 16.91 and a limitMaturity. |
There were twenty-four other index-included $25-pv-equivalent issues trading over 10,000 shares today.