CalPub LiveBlog: Differing Perspectives on OPEBs

Greetings from the La Costa Resort and Spa in Carlsbad, Calif., where more than 600 leaders from the nation's largest municipal market have gathered for The Bond Buyer's 17th Annual California Public Finance Conference.

"CalPub," as it's affectionately known around The Bond Buyer offices is our largest conference of the year, and one where the participants really take control -- the kind of "community ownership" that really sets the municipal bond market apart and makes it so much fun for us as journalists to cover.

Over the next couple of days, I'll try to share ome small glimpses of the conference with you through the blog.  As always, for the definitive word, keep an eye on The Bond Buyer's homepage.

For our first take, we had a little fun with our "live survey" panel, sponsored by MBIA, in which participants received handsets and were able to vote on some of the pressing questions facing the state.  One question stood out:  Recognizing that few municipalities have sold bonds to pre-fund their OPEB liabilities, we asked if the trend is likely to grow.

On balance, the audience wasn't very bullish, with 52% saying less than 25% of the assets in OPEB trusts would be bond-generated in 10 years.  But that masked a significant; surprise -- issuers actually expected a lot more issuance, with 7% of respondents predicting that bond financing would account for more than 75% of OPEB Trust assets.  Among investment bankers, who you would expect to be more eager to predict large numbers of bonds, the forecasts were more conservative:  71% thought less than 25% of assets would be bond-funded, and no one thought more than 50% of OPEB Trust assets would come from bond sales.

As MBIA's West Coast Head Jason Kissane said from his moderator's podium, it was an interesting moment in which bankers voted with their heads, not their hearts!

More soon...

The Economist: No More Muni Nukes

In a generally favorable story about the prospects for nuclear power to make a comeback in the US as the nation looks to expand and replace its existing power plants while also trying to reduce greenhouse gas emissions, The Economist magazine offers this cautionary note:

One of the reasons why the public turned against nuclear power last time round is that it found itself bailing the industry out. It would be wrong, not just for taxpayers but also for the industry, to set up another lot of cosy deals with governments. The nuclear industry needs to persuade people that it is clean, cheap and safe enough to rely on without a government crutch. If it can't, it doesn't deserve a second chance.

Personally, I think public opposition to nuclear power began at Three Mile Island and ended wth Chrenobyl.  Activists try to scare small children with tales of physical meltdowns, not financial ones.  The Economist's all-powerful editors prefer a carbon tax that makes Nuclear's economics stand up to fossil fuels', which sounds like a more elegant option, but in the absence of that action, direct government support could be a useful lever to get these pojects off the ground...