21 August 2019

Mesa's Municipal Bond Juggernaut > Rampant Land Speculation: "It's Just Dirt"

Just in case you missed Michael Kennington last week at a Mesa City Council Study Session for a rushed presentation on Item 6-i, you might wonder why the rush?
If you're missing a few details, can't fill-in-the-blanks, or connect-the-dots, there are good reasons why: the deals, zoning changes and title transfers on some over 11,000 acres of city-owned land conveying what are now called "obsolete water-rights" were done over time*
It's time to PLAY BALL and clean up all that MuniBond debt from 2013 to finance Sloan Park, that Spring Training Ground-Zero Complex $200M "Field of Dreams" for the conservative Republican Chicago Billionaire-Ricketts Family. Pitching that deal scored on the promise to sell-off the water rights on the 11,443-acre Mesa Water Farm in 3 phases. The last one was completed in June 2019.
The last bag of money will essentially remove the millions in debt obligations from the city's book by establishing a new escrow account....there's more to the story than that - much more. Readers of this blog might want to go back and watch the uploaded video from last week's study session.
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* BLOGGER NOTE:
Readers of this blog can certainly dig deeper using the Search Box at the top of this blog page or the one in the right-hand margin: Yes, it does take work and time.
Your MesaZona blogger isn't going to make-it-easy for you.
You can type-in: Saints Holding, Natalie Lewis, land barons, Pinal Land Holdings, or New Zion, or Heritage Park.
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Here's just a take-off point to help you get a grip:
The final buyer?
Saints Holding Company
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This report from Bloomberg helps explain that:
‘It’s Just Dirt’: Anything Goes in Today’s Muni Bond Market
Updated on
". . . The Federal Reserve’s decision to lower benchmark borrowing costs is keeping the U.S. awash in cheap credit. That has fueled a surge in corporate borrowing, bankrolled takeovers of debt-laden companies and, increasingly, sparked concern that some of those leveraged loans have become too risky. That angst has also seeped into the $3.8 trillion market for municipal bonds, a corner of the financial world that traditionally has served as a refuge for individual investors seeking steady, low-risk returns.
With the steep drop in yields wiping out the tax advantages of some tax-exempt securities, investors are hunting for higher payouts. That’s driven yields on the riskiest tax-exempt securities down to about 4%, the lowest since at least 2003, and in turn spurred an increase in sales from the most default-prone segments of the market. Shopping malls, centers for novel health-care treatments, factories seeking to turn trash into fuel and speculative real-estate developments like the one outside of Denver -- all have recently sold tax-exempt debt through local government agencies.
Yields on high-yield muni bonds have reached record lows
Yields on high-yield muni bonds have reached record lows
At the same time, investors are receiving less return for the risk, with the gap between yields on top-rated and junk-grade debt holding near where they stood at the end of 2007.
“There is so much money coming in -- even if 90% of the market rejects it, if 10% wants to buy, they are able to get it done,” said Dan Solender, a partner at Lord, Abbett & Co.
The lowest-rated municipal securities have rallied this year, delivering gains of nearly 10%, as plunging yields worldwide leave investors hunting for ways to get higher returns. Mutual funds focused on high-yield tax-exempt debt have pulled in cash every week since early January, with about $384 million added in the week ended Aug. 14, according to Refinitiv’s Lipper US Fund Flows data.
“It is a very aggressive market -- but to say that it is frothy means that this is the end of it, and I don’t know,” said Matt Fabian, a partner with Municipal Market Analytics, an independent research firm. “A year from now, we might be yearning for the discipline of 2019.”
Some money managers have started to pull back. Vanguard Group Inc. has cautioned against taking too much risk as the economy’s record-long expansion makes a recession look overdue. Goldman Sachs Group Inc. earlier this year shifted a record amount of its high-yield municipal fund into investment grade debt, anticipating that some of the projects financed by the securities may run into distress
 
 
 

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