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Abstract: 

Understanding the recurring periodic fluctuations in financial markets, such as the often cited January effect, bedevils market makers, issuers, and researchers alike. Public administration professor Robert A. Greer examines seasonality of a municipal market index with results that differ significantly from previous findings. His research finds that spring months have higher average general obligation yields and winter months have lower average yields, with no January effect. A once thriving bond insurance market has turned into a meager image of itself. Entrepreneurs Mark delson and George H. Butcher III make a case that the old business model of expecting to accumulate resources after the onset of stress was flawed. Instead, they suggest an approach based on having sufficient existing resources to cover existing risks. Given its critique of market practices, we would welcome comments on this design. The Stockton and Detroit bankruptcies have added new details on the working of Chapter 9 proceedings. Those bankruptcy judges looked beyond the common cash flow insolvency criterion and found that both cities were “service delivery insolvent.” Martin Ives, a governmental accounting expert, delves into this expanded focus and its implications for public financial management. He ends with a strong call for full accrual accounting of governmental-type funds. Case studies of troubled bond-financed projects and public-private partnerships can serve as fair warning in doing future due diligence by issuer officials, transaction partners, their advisors, and market makers. Public administration professor G. Jason Jolley and student William B. Klatt dissect one of North Carolina’s first tax increment financed projects, a new theatre built to feature a member of the Dollywood family. Needless to say, it did not work out well.

Keywords: Bond market seasonality, ARIMA, tax increment financing, service delivery, municipal insolvency, bond insurance

Affiliations:  1: Editor in Chief.