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- "Fiscal cliff" deal avoids AMT pitfall
As part of the "fiscal cliff" deal negotiated by Vice President Joe Biden and Senate Minority Leader Mitch McConnell, R-Ky., the alternative minimum tax will be permanently indexed to inflation. "The expiration of the previous patch threatened to significantly raise borrowing costs for AMT bond issuers," Michael Decker, co-head of municipal securities at SIFMA. The permanent extension of the patch ensures that the law will continue to apply only to high-wealth Americans. The Bond Buyer (special access for readers of SIFMA SmartBrief)
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- CMBS risk rises as delinquency of underlying loans increases
Commercial mortgage-backed securities have been popular with investors for some time, largely because of their relatively high yields compared with other fixed-income investments, but questions are being raised about whether the pricing reflects the full risk of default. Trepp reported that 9.71% of commercial mortgages underlying CMBS issues were at least 30 days delinquent in November. In October 2008, the delinquency rate was below 1%. The Wall Street Journal
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- U.S. could still face credit downgrade
Although the eleventh-hour deal to avert the "fiscal cliff" generally avoided tax increases, it also failed to include any serious debt reduction. Nobody predicts America's debt to gross domestic product ratio will fall below the International Monetary Fund's projections of it rising to 90% by 2016. That heavy load could threaten America's credit rating with the big three ratings firms -- Moody's, Standard & Poor's, and Fitch. The Wall Street Journal/Dow Jones Newswires
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- Cat bonds in 2012 post 2nd-highest total
Catastrophe bonds placed in 2012 totaled $6.3 billion, the second-highest total for the market ever. The record is $7 billion, which was set in 2007. Cat bonds are gaining in popularity because they often garner double-digit returns and are perceived to have a low correlation to mainstream financial shocks. Reuters
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- Senators ask GAO: Would banks "too big to fail" get rescued?
The Government Accountability Office said it will look into any economic benefit that comes from being a bank deemed "too big to fail." Sens. David Vitter, R-La., and Sherrod Brown, D-Ohio, sought the investigation, concerned that banks such as JPMorgan Chase, Bank of America and Citigroup might be entitled to a bailout if they got into financial straits, something Congress wants to avoid. Bloomberg
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- Analysis: Basel III represents regulatory difficulties
As governments propped up ailing banks during the past five years, regulating the industry became increasingly more complex. The EU and the U.S. each drafted a 700-page proposal for Basel III rules. In addition, the U.S. created the Dodd-Frank Act, which SIFMA says will end up being 2,900 pages of regulations. Bloomberg
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- SIFMA member call: The "Fiscal Cliff" -- 9 a.m. Eastern on FRIDAY
At 9 a.m. Eastern on Friday, SIFMA will hold a members-only call on recent developments related to the U.S. "fiscal cliff," specifically the American Taxpayer Relief Act of 2012, which Congress passed Tuesday to avert the cliff. The call will focus on individual- and corporate-tax provisions in the law and provide insight into tax and spending debates to occur in February when the Treasury Department is expected to exhaust its use of "extraordinary measures" to prevent the U.S. from defaulting in 2013. Registration is required. Participants can register using conference ID 10023239. This call is closed to the media and nonmembers. Check your firm's membership status online, or contact SIFMA's Office of Member Engagement at (212) 313-1152 or inquiry@sifma.org.
- SIFMA's 2013 Insurance- & Risk-Linked Securities Conference -- March 5-6 -- New York City
Register now to save on registration! The program is available for SIFMA's Insurance- & Risk-Linked Securities Conference, which will address the key issues and strategies for insurance- and risk-linked securities professionals for the coming year. Join your peers and industry experts as they discuss issuance perspectives from public entities, the evolving role of reinsurers in the ILS market, and more. Also, hear from guest speaker: Tim Marshall, meteorologist and principal engineer at Haag Engineering, for his insights of this specialized issue.
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