Breckinridge Capital Advisors Hosts Taxable Municipal Bond Webinar for Institutional Investors.
BOSTON -- Breckinridge Capital Advisors, Inc., a Boston-based fixed income manager, hosted a 60-minute interactive webcast on Nov. 5 on the taxable municipal bond market, which attracted more than 300 registrants. The webcast was entitled "Diversifying Your Portfolio with an Allocation to Build America Bonds (BABs) and Other Taxable Municipal Bonds".
Featured presenters were Kemp Lewis, a managing director at Morgan Keegan, and Peter Coffin, president of Breckinridge Capital. Financial journalist Anuj Gangahar moderated the event. Registrants included investment consultants, pension funds, registered investment advisors, and endowment and foundation professionals. The audience posed more than 50 questions during the Q&A period, on issues such as municipal bond credit quality, market liquidity, the cost of the BAB program and the likelihood of its extension.
The full webcast is available for replay on the Breckinridge Capital website at www.bondinvestor.com.
Overview of Webinar Content
The webinar presentation addressed the importance of the BAB program to the municipal bond market, the appeal of BABs to institutional investors and the approach for managing a standalone allocation to taxable municipal bonds.
Importance of BABs to the municipal market
Created as part of the American Recovery and Reinvestment Act of 2009, the BAB program provides municipalities with the option of issuing taxable bonds-instead of tax-exempt bonds-and receiving a 35 percent interest subsidy.
"BABs have broadened the sources of demand for municipal bonds to include institutional investors such as endowments, pension funds and insurance companies that often have a strong appetite for long-term taxable bonds," said Lewis.
According to Coffin, the cost to the federal government of the BAB program should be roughly equivalent to or just slightly more than the "cost" of forgoing tax revenue on tax-free municipal bonds because the BAB subsidy will likely be recouped through incremental tax revenue.
Appeal to institutional investors
Taxable municipal bonds appeal to institutional investors because of their low credit risk and attractive returns relative to similarly rated corporate bonds.
"Municipal defaults are extremely rare due to the taxing power of the municipality and their role in providing essential services. Most municipalities have very manageable debt levels," said Coffin.
Examples cited in the webinar of recent high quality, taxable-municipal bonds with attractive yields include issues from Columbus, OH and Clayton County, MO.
Managing a standalone allocation of taxable municipals
Due to the large number of municipal bond issues, the lack of a central exchange and infrequent trading in the secondary market, a unique investment approach is needed to effectively manage a taxable municipal allocation.
"There are nearly 65,000 different municipal bond issues; 20 times the number in the corporate bond market. The most attractive opportunities in terms of credit quality and yield are often found in new issues from lesser known municipalities or in opportunistic trading in secondary market," explained Coffin.
An investment advisor specializing in municipal bonds and having a broad dealer network can provide access to the full range of market activity. Additionally, ongoing credit research and attentive monitoring can provide greater insight and access to short-lived opportunities in the secondary market.
About Breckinridge Capital Advisors, Inc.
Breckinridge Capital Advisors, Inc. is a Boston-based Registered Investment Advisor specializing in the management of customized tax-exempt and taxable fixed-income portfolios, with a primary focus on municipal bonds.
With over $11 billion in assets under management and a deeply experienced investment team, the firm understands the value of fundamental credit analysis, opportunistic trading and, most importantly, the preservation of capital.
Breckinridge's mission is to provide investors with fixed-income portfolio management that combines institutional strategies and rigor with a common-sense investment approach, with the goal of generating strong risk-adjusted returns over time.
For contact information please visit www.bondinvestor.com.
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|Date:||Nov 10, 2009|
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