National Association of State Treasurers Annual Meeting Municipal Bond Market: The Institutional Vie

1
National Association of State Treasurers Annual
Meeting Municipal Bond MarketThe
Institutional View

• Charles GrandeSenior Vice PresidentSeptember
  21, 2005

2
Charles Grande

• Sector Manager, Municipals
• Portfolio Manager
• Member of Investment Strategy Committee
• 16 years professional experience
• BS, Pace University
• MBA, Iona College
• National Federation of Municipal Analysts
• Municipal Analysts Group of New York
• Society of Municipal Analysts

3
Why Own Municipals?

• Profitable operations
• Municipal bond ownership provides after tax
  benefit
• Relief from Premium tax payments
• State required pledging/depository needs
• Alternative to Treasuries for state required
  deposits
• Relative value

4
Where Along the Curve to Buy Muni Bonds

• Generic Insured Municipal Yield Curve

Source Municipal Market Data As of 9/6/2005
5
Relative Value of Municipal Bonds

• Municipal vs. A Corporates After Tax Yield
  Pick-Up

20 YR
10 YR
5 YR
Source Municipal Market Data, Bloomberg As of
9/6/2005
6
Municipals vs. Corporates
Relative cheapness equals investment opportunity.
. .
Source Municipal Market Data Bloomberg
7
Pet Peeves
8
Allocations

• Long Term Players vs. Opportunity Players
• Day-to-Day deal status
• Stickered official statements

9
Future Issues on the Horizon

• Disclosure, disclosure, disclosure
• Bond counsel opinions
• Qualified vs. unqualified
• Pension Funding
• Haves Have Nots

10
National Association of State Treasurers Annual
Meeting Municipal Bond MarketThe
Institutional View

• Charles GrandeSenior Vice PresidentSeptember
  21, 2005