Recent Commentary
MMA Muni Outlook > September 2008
Market Summary
September was the most volatile month of the year amid the acceleration of financial calamity attributed to the ongoing consequences of the subprime adversity. The magnitude of the associated problems became acute as the US Government took over Fannie Mae, Freddie Mac and AIG, and Lehman entered bankruptcy (later to be bought by Barclays), JP Morgan acquired WaMu’s assets, Bank of America bought Merrill and Citigroup purchased the banking operations of Wachovia. Goldman Sachs received a $5B investment from Buffet’s Berkshire, while Goldman and Morgan Stanley filed with the Federal Reserve to become bank holding companies. However, it was the events of September 15, led by Lehman’s bankruptcy, which exerted the greatest degree of force on the municipal market. The loss, albeit temporary, of the firm as a market-making entity and counterparty decreased secondary market liquidity for investors, inhibited issuers access to the capital markets and increased the risk perception regarding the credit-worthiness of remaining securities firms. The immediate impact emanated from decisions of money market funds to exercise the put options on VRDN programs that were so massive that remarketing agents were unable to hold the securities because of capital constraints... (For continuation of Outlook see link below.)
Full Report: Municipal Market Advisors Muni Outlook September 2008
