STOCK MARKET WATCH -- Wednesday, 7 March 2012

[Demeter]

12. Municipal Defaults May Surpass Record in 2011, Lehmann Says

http://www.businessweek.com/news/2011-12-07/municipal-defaults-may-surpass-record-in-2011-lehmann-says.html

Municipal-bond defaults, including bankruptcies and the use of reserve funds for payments, may set a record this year as tobacco bonds and AMR Corp.’s Chapter 11 filing push the total to more than double the previous mark, said Richard Lehmann, publisher of the Distressed Debt Securities Newsletter.

Adding tobacco debt sold by states such as California and Ohio as well as AMR-backed munis, the total will eclipse the $8.62 billion high set in 2009, Lehmann said today. His newsletter in Miami Lakes, Florida, tracks defaults and uses a broader measure than those applied by other municipal analysts.

“We’re going to hit $20 billion this year,” Lehmann said today in a telephone interview. His tally wraps in everything from bankruptcies to missed payments and using reserve funds to service the debt. “These amounts will make 2011 the highest default year by far,” he said.

Not all analysts put AMR and tobacco debt in their totals for defaults in the $2.9 trillion market, because payments to investors haven’t been officially missed, said Matt Fabian, managing director of Municipal Market Advisors in Concord, Massachusetts. Fabian, who compiles payment defaults, said those have reached $2.1 billion this year, down from about $2.8 billion in 2010...MORE