Mass transit investors sanguine despite looming 'fiscal cliff'

Mass transit investors are looking past the well-publicized "fiscal cliff" facing public agencies and taking comfort in the more stable revenue streams like sales taxes that back their bonds. "They're all facing lower ridership and diminishing federal pandemic relief," said Sheila May, director of municipal bond research at Boston-based GW&K Investment Management. "That narrative is real, but for bondholders, for those of us who look closely at what's securing our bonds, that narrative is running alongside the one that we're seeing from the security," she said. "We're insulated from a lot of the problems."

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The Securities and Exchange Commission has settled charges against Chicago-based investment advisor Aon Investments and in a separate action, the firm's former partner Claire Shaughnessy for misleading the Pennsylvania Public Employees' Retirement System on a certain discrepancy when calculating investment returns.

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Dealer groups representing firms of all sizes are urging the Securities and Exchange Commission to adopt the Municipal Securities Rulemaking Board's 2024 rate card for fear that reverting to 2023 levels would cause significant disruption. That's according to a joint letter signed by the Bond Dealers of America and the Securities Industry and Financial Markets Association, who both filed individual comment letters earlier this month objecting to many aspects of the MSRB's new fee setting process.

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Guam's issuer rating was raised to investment grade by Moody's Investors Service, which cited significant military construction and other federal government support. Moody's upgraded Guam's issuer rating, general obligation bonds, hotel occupancy tax bonds, and business privilege tax bonds to Baa3 from Ba1 and raised the COPs to Ba1 from Ba2. The outlook is stable.

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The public power sector's outlook was revised to negative from stable by S&P Global Ratings due to factors including inflation and government mandate pressures. Inflation diminished customers' ability to afford electricity rates, said David Bodek, S&P sector leader.

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Municipals saw a more constructive secondary trading session Thursday and mutual funds reported the third consecutive week of inflows while U.S. Treasuries improved.

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