Log in
E-mail
Password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON

MarketScreener Homepage  >  News

News :
Latest NewsCompaniesMarketsEconomy & ForexCommoditiesInterest RatesBusiness LeadersFinance ProfessionalsCalendarSectors 

BlackRock muni strategist Sean Carney says 50% of high-yield municipal market is Puerto Rico & tobacco bonds.

share with twitter share with LinkedIn share with facebook
share via e-mail
0
08/14/2014 | 05:08am EST


ANCHOR QUESTION OFF-CAMERA (ENGLISH) SAYING:

We know this year and actually, in the last couple of weeks, we saw investors chasing yield but then having a change of heart, and I'm talking specifically about high yield overall, which has seen some outflows from funds. Certainly, Puerto Rico is a high-yield municipal credit. Do you avoid high-yield muni bonds right now in addition to what we're seeing with the overall market now adding Puerto Rico into the mix?

SEAN CARNEY, MUNICIPAL STRATEGIST, BLACKROCK (ENGLISH) SAYING:

Yeah, great question. At BlackRock, we manage money across the entire yield curve and credit spectrum, so we don't avoid high yield but we do limit high yield in certain instances. And as you allude to the high-yield sector can be quite volatile in municipal bonds. And if you think about why, it's not a very diversified portion of our market. About 50% of the high-yield market today is made up of Puerto Rico and tobacco bonds which have both seen their fundamentals deteriorate in recent years, and more particularly in recent months when it comes to Puerto Rico. So what we believe: the headlines will drive the overall returns in the high-yield space. There are still some opportunities there, but it's important to be prudent about the amount that you allocate to high-yield municipal bonds at this time.

ANCHOR QUESTION OFF-CAMERA (ENGLISH) SAYING:

One reason we have seen throughout the year such interest in Puerto Rico debt is that the debt is triple tax free. Do you see a space within municipal bonds where investors might gravitate to? Very hard obviously to find that very sort of special factor that you get with a Puerto Rico debt. When somebody is trying to shield some of the taxes, is there an acceptable alternative?

SEAN CARNEY, MUNICIPAL STRATEGIST, BLACKROCK (ENGLISH) SAYING:

There is, if you think about what got Puerto Rico into the situation that it is today, which is ultimately in an over-levered economy, is the fact that they have benefited from having a triple tax exemption and an investment grade rating. Now that that investment grade rating has gone away, it will leave investors looking for a replacement or a surrogate. And what we've seen is some investors have gone into other sectors within the high-yield space, and in particular into tobacco bonds. But as you mentioned, the benefit of the tax exemption is greater today than it has been in any recent time. So we do feel as though the demand will continue within the market for more tax exempt income.



share with twitter share with LinkedIn share with facebook
share via e-mail
0
Latest news
12:27pCROSS TIMBERS ROYALTY TRUST : Results of Operations and Financial Condition, Financial Statements and Exhibits (form 8-K)
AQ
12:25pPortuguese bank CGD sells 500 million euro senior non-preferred bond
RE
12:25pCloudian Makes Two Executive Appointments to Power Further Innovation and Growth
GL
12:23pTC ENERGY : Land affected by Keystone pipeline leak bigger than thought
AQ
12:20pA P MØLLER MÆRSK A/S : MSC hires ex-Maersk operations head Toft as CEO of cargo business
RE
12:20pOFFICE OF GOVERNOR OF STATE OF NEW YOR : Green and Clean Energy Solutions in New York Schools
PU
12:19pASHTEAD GROUP PLC : - Transaction in Own Shares
PR
12:18pMotor show premiere for Taycan 4S, Macan Turbo and 99X Electric in California
PR
12:15pAMARIN : John Thero Awarded EY Entrepreneur of The Year® 2019 Life Sciences National Award
AQ
12:15pNORTHERN BITCOIN : Merges with leading us competitor
EQ
Latest news
Latest Videos
USA - ROSNER
Positive macro picture for U.S. consumers - BNP Paribas
SINGAPORE - ROSGEN
U.S. dollar has further to rally - Citi
UK - SHAH
Fiscal consolidation may lead to rate upgrade for India - Shah
UK - PARSONS
QE makes the rich richer and the poor poorer - NAB
USA - AMOBI
Turner Broadcasting a bright spot for Time Warner - S&P Capital
SINGAPORE - ROSGEN
Good environment for equities now - Citi
UK - SHAH
Investors want to see India cut subsidies - Shah