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☆ Rising Rates Squeeze Small Town Borrowers
▼ + stars: | 2023-03-07 | by ( Heather Gillers | ) www.wsj.com time to read: 1 min

Rising interest rates are squeezing cash-strapped towns and school systems that use short-term borrowing to keep cash flowing while they wait for property tax dollars to come in. A-rated cities and school districts are paying 3.16% for a one-year loan issued March 3, compared with 0.21% at the beginning of 2022, according to data from Refinitiv MMD. In places where local budgets are already burdened by inflation, rising borrowing costs add to the pressure to raise taxes or cut services.

China has lifted Covid-19 restrictions and pivoted back to focusing on the country’s growth. China’s outsize position in emerging markets has created a dilemma for many investors. For years, as companies from the world’s second-largest economy grew rapidly and became more valuable, China came to make up more than 40% of some major international benchmarks for stocks and corporate bonds. Investment funds with similarly large allocations to Chinese assets did well in 2019 and 2020, when the country’s rise drove gains in emerging markets.

☆ Fed Rate Policy Is Shaking Up the World of Muni Debt
▼ + stars: | 2023-02-24 | by ( Heather Gillers | ) www.wsj.com time to read: 1 min

Concerns that the Federal Reserve will continue to increase rates have affected municipal fund inflows. The markets’ bumpy start to 2023 is causing whiplash even in the historically placid realm of state and local government debt. Municipal bonds this month have erased nearly all of their January gains after fears of rate increases cooled investor appetites. “It has been a roller coaster,” said Nathan Will , head of municipal credit research at Vanguard Group.

☆ Stocks Edge Higher After Strong Retail Data
▼ + stars: | 2023-02-15 | by ( Joe Wallace | Heather Gillers | ) www.wsj.com time to read: 1 min

Stocks bobbled Wednesday after data showed a rebound in retail sales, a sign of economic strength that could encourage the Federal Reserve to keep raising interest rates. The indexes spent much of the day in the red, then turned higher. The Nasdaq Composite Index climbed 110.45 points, or 0.9%, to 12070.59. The S&P 500 rose 11.47 points, or 0.3%, to 4147.60. The Dow Jones Industrial Average bumped up 38.78 points, or 0.1%, to 34128.05.

☆ Pension Investments in Private Credit Hit Eight-Year High
▼ + stars: | 2023-01-29 | by ( Heather Gillers | ) www.wsj.com time to read: 1 min

Private credit now amounts to more than $100 billion in the retirement savings of U.S. and Canadian teachers and other public workers, according to an estimate. North American pension-fund investment in private-market loans reached an eight-year high in 2022, even as banks pulled back on lending and default rates inched upward. The average share of these retirement funds parked in the illiquid, typically unrated debt has crept up steadily to 3.8%, the highest on record, according to analytics company Preqin. Though a fraction of the overall portfolio, private credit now amounts to more than $100 billion in the retirement savings of U.S. and Canadian teachers, police and other public workers, according to a Wall Street Journal estimate based on Federal Reserve data and pension financial reports. And the pensions are planning to add more: Their average target allocation is 5.9%.

☆ For Closed-End Fund Investors, Paper Losses Turn Real
▼ + stars: | 2023-01-12 | by ( Heather Gillers | ) www.wsj.com time to read: 1 min

Six BlackRock municipal-bond funds experienced at least two payout cuts last year. Investors in closed-end funds are feeling a painful consequence of the historic market slump: cuts to their monthly payouts. A Pacific Investment Management Co. California municipal-bond fund slashed dividends by 45% this month, while a Nuveen LLC stock fund endured a 7% cut. Eaton Vance Management in November cut distributions across six stock funds by as much as 24%. Six BlackRock muni funds endured at least two payout cuts last year, with dividends falling by as much as 38% in total.

☆ After Muni-Bond ‘Bloodbath,’ Expectations for 2023 Are Muted
▼ + stars: | 2022-12-27 | by ( Heather Gillers | ) www.wsj.com time to read: 1 min

State and local government bonds are on track to post their worst yearly performance since 1981, a deep slump for an investment prized for safety and stability. “This year was a bloodbath,” said Nicholos Venditti, a municipal bond fund portfolio manager with Allspring Global Investments. “It was a bloodbath in munis the same way it was across all asset classes.”

☆ Cash Cushions Dwindle at U.S. Pension Funds
▼ + stars: | 2022-12-27 | by ( Heather Gillers | ) www.wsj.com time to read: 1 min

Cash holdings are the lowest since the financial crisis at U.S. government pension funds and just above last year’s 13-year low for U.S. corporate pensions, heading into a year that many on Wall Street expect to test investors. Cash holdings hit 1.9% of assets at state and local government pension funds and 1.7% of assets at corporate pension funds as of June 30, according to an annual snapshot from Wilshire Trust Universe Comparison Service.

☆ Bond Investors Swap Mutual Funds for ETFs at Record Pace
▼ + stars: | 2022-12-10 | by ( Eric Wallerstein | Heather Gillers | ) www.wsj.com time to read: 1 min

The aggressive pace of Federal Reserve tightening has led to a difficult year in the bond market. Worn down from record losses, investors have fled bond mutual funds en masse. But many aren’t quitting on bonds—they are just turning to exchange-traded funds. Some investors sell beaten-down positions in bond funds to harvest tax losses. In many cases this year, investors have opted to put cash into similar ETFs to maintain bond exposure in their portfolios.

☆ Biden Administration Awards $36 Billion to Pensions for Truckers, Warehouse Workers
▼ + stars: | 2022-12-09 | by ( Heather Gillers | Catherine Lucey | ) www.wsj.com time to read: 1 min

President Biden, joined by labor leaders Thursday, says thousands of union retirees and workers could be reassured that the pensions they worked for would be there when needed. The Biden administration has awarded its biggest pension bailout to date under a 2021 package aimed at shoring up near-insolvent retirement plans. The $36 billion in taxpayer aid announced Thursday will prevent threatened cuts to the pension checks of 350,000 truck drivers, warehouse workers and others, according to a document provided by the White House.

☆ Local Governments, Many on Wall Street Line Up Against Muni-Data Bill
▼ + stars: | 2022-11-26 | by ( Heather Gillers | ) www.wsj.com time to read: 1 min

A pitched battle over data is under way in the $4 trillion market that finances roads and sewers. At issue is a little noticed measure in proposed federal legislation that would mandate how state and local governments across the country present their financial results to investors. The municipal-bond market in some ways remains stuck in the last century. Municipalities file reports erratically according to different standards, and the files aren’t machine-readable by investors attempting to study city or state finances before they buy or sell. That marks a contrast to corporate disclosures, where standardized data can be extracted by computers.

☆ FTX founder's remarks pose challenge for his lawyers
▼ + stars: | 2022-11-18 | by ( Andrew Goudsward | ) www.reuters.com time to read: +4 min

Nov 18 (Reuters) - FTX founder Sam Bankman-Fried, facing mounting legal challenges over the collapse of his cryptocurrency exchange, may have harmed his defense by speaking publicly in recent days, legal experts said. Bankman-Fried has sought to explain the implosion of FTX and disparaged government regulators in posts on Twitter and conversations with reporters. Attorneys said such statements will likely make life more difficult for the defense lawyers seeking to manage fallout from the exchange’s demise and navigate multiple federal investigations. His law firm represents many other financial industry clients. Joseph is a former president of the American College of Trial Lawyers who has written about racketeering law and rules of evidence.

☆ Voters Approve Tens of Billions of Dollars in Muni Projects
▼ + stars: | 2022-11-13 | by ( Heather Gillers | ) www.wsj.com time to read: 1 min

U.S. voters said yes to tens of billions of dollars for road-paving, school-building and other local projects last Tuesday, promising a new wave of bonds for eager investors. The voters approved $57 billion out of the $63 billion in ballot measures for which results are available, according to data from S&P Global Market Intelligence. If that 90% approval rate holds steady, the total amount of new municipal debt authorized Tuesday will come to about $90 billion, the most from any election day in the data, which goes back to 2012.

☆ U.S. Pensions Take a Fresh Look at China
▼ + stars: | 2022-10-29 | by ( Heather Gillers | Michelle Chan | ) www.wsj.com time to read: 1 min

The California State Teachers’ Retirement System, based in West Sacramento, began searching in August for dedicated China stock managers. U.S. public pension funds are splintering in their approach to China, reflecting rising investment risks and the increasingly fractious politics of the two largest global economies. Retirement-plan officials are staking out a range of positions. California’s teacher-pension fund launched in late August a search for its first dedicated China stock managers, while Texas’ teachers retirement fund is cutting its China stock allocation by half. Florida’s public-worker fund earlier this year halted new investment strategies in China, citing past crackdowns on education and tech companies.

☆ Private Lending Takes Root in Muni Market
▼ + stars: | 2022-10-26 | by ( Heather Gillers | ) www.wsj.com time to read: 1 min

Banks typically buy tax- or fee-backed debt from small school districts or towns in quantities that can be as little as a few million dollars. A pandemic surge in privately sold municipal bonds is highlighting how private deals have become a mainstay of the $4 trillion market for state and local debt—and a go-to in times of stress. During the three months ended in May 2020, the amount of municipal debt sold privately spiked to 13.4%, the highest share in 13 years on record, according to a report this week by the Municipal Securities Rulemaking Board. It has since retreated to about 8%, or around $36 billion—up from 4% in 2012 but in line with its average for the past decade, according to data from the board and Refinitiv.

☆ U.S.-Based Pensions Rush to Assess Interest-Rate Risk
▼ + stars: | 2022-10-18 | by ( Heather Gillers | ) www.wsj.com time to read: 1 min

General Electric, with operations including a gas-turbine plant in South Carolina, uses derivatives to hedge risks in the company’s pension portfolio. David Eisenberg got a call this month from a finance official at a U.S.-based multinational company. The executive wanted to know whether the company had derivatives in its retirement portfolio. “We explained that they don’t,” said Mr. Eisenberg, an investment adviser with Buck, a New York-based pension-actuary and human-resources consulting firm. “They were worried that if they were using derivatives they were exposed to risk.”

☆ Pensions Brace for Private-Equity Losses
▼ + stars: | 2022-09-24 | by ( Heather Gillers | Dion Rabouin | ) www.wsj.com time to read: 1 min

Public pension funds are already reporting big losses in 2022. Things are likely to get uglier. That is because the funds, which manage around $5 trillion in retirement savings for the nation’s teachers, firefighters and other public workers, haven’t yet factored in second-quarter returns on private equity and other illiquid investments.

☆ Calpers’ Investment Chief Highlights Lagging Returns, ‘Lost Decade’ for Private Equity
▼ + stars: | 2022-09-20 | by ( Heather Gillers | ) www.wsj.com time to read: 1 min

Calpers put $5 billion or less in new money into private equity every year between 2009 and 2018. The nation’s largest pension fund got a scathing performance review Monday when its new investment chief highlighted the retirement system’s underperforming returns and estimated it missed out on $11 billion in gains during a “lost decade” for private equity. The unusually candid presentation to board members of the California Public Employees’ Retirement System, known as Calpers, showed returns lagging behind other large pensions in almost every asset class during the past 10 years, with private equity trailing the most, 1.3 percentage points.

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