The Bond Blogger: What to Expect

More than a century ago, The Bond Buyer was launched by William Shanks.  Hitting the streets at a time of larger-than-life press barons like Horace Greeley and William Randolph Hearst, the infant financial rag fit right in as a reflection of its founder: Broad-minded, sometimes strident, and often uproarious.  Over time, the rules of journalism changed and the paper evolved to what you see today -- an institution known for its objectivity and detachment.

Today, we go back to the future: Welcome to The Bond Blogger.

Today's BB: Upside on the Downside

Proposition 13, California's landmark tax-limitation initiative is rarely cheered by municipal market participants, since it imposes severe revenue constraints on most of the state's property-tax-fueled governmental entities like cities and school districts.  Proposition 13 caps annual property assessment increases at 2%.

But Standard & Poor's identified the bright side:  As real-estate prices begin to fall in the current market, property tax revenues are cushioned by the fact that appraised values are generally still well below actual market values.  Since Prop 13 allows property values to be marked up to the market level when a property changes hands, governments still get a little windfall with each sale, albeit not as rich a bump as they experienced at the height of the real-estate market.

SEC Chairman Cox continued to be surprising:  Last month, he suggested he supported revisiting the Tower Amendment, which governs the municipal securities regulatory environment.  Then, on Friday, he told a meeting of mutual fund directors "it’s high time for a reevaluation" of the 12b-1 marketing fees that are a core of the industry's business model.  It remains to be seen, however, whether the other commissioners share his viewpoints.

Elsewhere, a survey of the New England landscape and finds states increasingly using bonds to preserve open space, the New York State transition continues as Gov. Eliot Spitzer installs a veteran of his Attorney General's staff as executive director of the Dormitory Authority (one of the nation's most active bond issuers), and The Bond Buyer Online throws open its doors for a week of free trials.