‘Investor-friendly attitude’ in RI lets Wall Street shrug off newsApril 20th, 2012 at 4:28 pm by Ted Nesi under Nesi's Notes, On the Main Site
The state is planning to sell $118 million in general-obligation bonds to refinance existing debt next week, and apparently all the bad publicity we’re getting won’t be a problem thanks to the pension overhaul, the bondholders-first law (details here and here) and relatively cautious budgeting.
That’s according to Mike Cherney, reporting for Dow Jones Newswires. The comments he got from investors are fascinating, on the one hand for what they say about how the state’s image is getting battered and on the other hand for how little concern they seem to have about it overall (emphasis mine):
Rhode Island’s investor-friendly attitude should attract buyers to its $118 million bond sale next week, market participants said, despite the state’s well-known problems with high unemployment and wide budget gaps. …
“You want a state that’s going to have policies that are bondholder friendly, that recognize the importance of the market and the importance of contract law,” said Robert Miller, senior portfolio manager at Wells Capital Management. “Rhode Island does fit the bill pretty well.”
Miller contrasted that with Alabama, where the state ultimately failed to act before Jefferson County, Ala., filed the largest municipal bankruptcy ever in November. Moody’s rates Alabama Aa1, a notch above Rhode Island, which it assigned Aa2.
“I’d still rather own Rhode Island,” Miller said ….
“It’s a matter of price, but there’s plenty of demand out there,” [Dan Solender, director of municipal bond management at Lord Abbett & Co.,] said. “Clearly the state’s been in the headlines, but it’s more for their local issues.”
Adam Mackey, senior portfolio manager at PNC Capital Advisors, said institutional investors will focus on the state’s finances, keeping the negative headlines about Rhode Island’s cities separate.