CNBC has a slide show based on Fitch Ratings showing the municipal bonds that they see as being at greatest risk of default. They are:
Cluberson County Hospital District, Texas
Rating: BBB-
Type: General Obligation - Unlimited Tax
Sector: County
Buena Vista Township, Mich.
Rating: BBB-
Type: General Obligation - Limited Tax
Sector: City
Robstown, Texas
Rating: BBB-
Type: General Obligation - Limited Tax
Sector: City
Tulia, Texas
Rating: BBB-
Type: General Obligation - Limited Tax
Sector: City
Saddle Mountain Unified School District No.90, Ariz.
Rating: BB
Type: General Obligation - Unlimited Tax
Sector: School District
Littlefield, Texas
Rating: BB
Type: General Obligation - Limited Tax
Sector: City
U.S. Virgin Islands
Rating: BB
Type: General Obligation - Unlimited Tax
Sector: States
Detroit, Mich.
Rating: BB
Type: General Obligation - Unlimited Tax
Sector: City
Rating: BB-
Type: General Obligation - Limited Tax
Sector: City
Harvey, Ill.
Rating: B
Type: General Obligation - Unlimited Tax
Sector: City
Pontiac, Mich.
Rating: CCC
Type: General Obligation - Limited Tax
Sector: City
For the Fitch Report on Culberson County Hospital District go to:
ReplyDeletehttp://www.allbusiness.com/banking-finance/financial-markets-investing/12374899-1.html
The bonds were issued in 2009.
Did CNBC even read the Fitch report on Culberson County? Besides spelling the county's name incorrectly, it missed two big factors in the future stability of these low rated bonds.
ReplyDeleteOne, the hospital is designated a Critical Access facility by Medicare, which comprises 80% of their patient load. CAH means Medicare treats the hospital like a public utility, covers its costs plus 1%. Interest expense is an allowable cost.
Two, the hospital is tax supported, with 80% of the tax base from natural gas pipelines. I'll grant that natural gas prices are low. However, unless pipeline firms go SemGroup (making billions in bad energy bets), this should provide a stable tax base for bond repayment. (SemGroup imploded under The Carlyle Group's ownership)
I'm not saying the bonds aren'y doggy. There are factors that suggest it's a relatively stable dog.