Monday, July 25, 2011

Basis Points

The city of Pittsburgh is refinancing some bonds. Blah, blah.  Fitch has rated the bonds that will hit the market today or tomorrow.   Given low interest rates, it is the type of thing they should at least be considering so no big deal in itself.  Still, Infy seems to be casting some aspersions on the deal, but is lacking specifics. I can't tell where he is heading with his comments. Maybe we can crowdsource this and figure what has has face down.  Here is the preliminary official statement for the new bonds.  At least in my quick look, I don't see anything too untoward, but the devil would be in the details. The whole issue of openess and transparency in municipal bond world is a big big deal these days and impending changes could portend a very different way of doing business. Would have a big impact locally as much as anywhere.

One thing I do see.. and it is not the biggest of shenanigans in context, but I take the public description is that this is entirely a refinancing and not a new debt issuance.  I guess that is mostly true, but there is a note (page 2, pdf page 8) that says they are using bond proceeds to pay the fall 2011 quarterly bond payments on a series of bonds.  That is effectively new debt to me, but hey, it's marginal enough to not be worth the argument.

So if anyone sees something I am not, I am sure they will let us know.  However, there is a fascinating section on the pension imbroglio in the verbiage of the POS. (no...  that means Preliminary Official Statement).  I was going to copy a few pages whole here, but you can read yourself.  On page 19 (page 25 per the pdf numbering) is a whole section titled 'municipal bankruptcy' that is fascinating for its existance in itself.  But it is on page 20 (page 26 of the pdf numbering) that the pension issue is discussed explicitly.  Every single sentence deserves parsing from political, financial, actuarial and legal angles, but I don't want to bore anyone.  They do seem to making a gratuitous point that the transfer of city reserves into the pension fund happened before the end of 2010, but let's not delve into the esoteric no matter how crucial it is to the big picture.

Elsewhere, all sorts of funny factoids in the ephemera.   Height doesn't matter: The US Steel building is now the 6th most valuable property in the city based on assessments and some assessment appeals I presume.  Not really talked about much, but the potential impacts of the pending county reassessments may be larger for the big building owners Downtown than most anyone else. 

On page A-10 (pdf page 50) is some demographic info I can't pass up.  There seems to have been a massive outbreak of Zombie-ism between 2009 and 2010. 

On Page A-7 is this verbatim "The County and Judge Wettick agreed to a reassessment schedule, to be complete by January 1, 2012, which is anticipated to provide a boost in future revenue".  One, do they read the newspaper coverage of changes in the reassessment progress and two, do they read the state laws on revenue neutrality??

Page A-13... 10K city residents work for Walmart? Really? I'm not disputing it, just news to me. Lots of Walmart employees in the region for sure, but just not many Walmarts in the city proper so I am fascinated by the reverse commuting angle. 


Blogger Infinonymous said...

Knowledge is good.
--Emil Faber, founder

Monday, July 25, 2011 11:54:00 PM  
Anonymous MH said...

Walmart must have some kind distribution center or own some brand I don't know about. According to their web sites, there are only 20 Walmarts and 8 Sam's Clubs within 40 miles of Pittsburgh. If the 10,000 includes just those, they'd each have to have 350 employees all of whom live in Pittsburgh.

Tuesday, July 26, 2011 10:05:00 AM  
Anonymous Corey said...

The list of largest emoployers on A-13 is from the Pittsburgh Business Times' list of 50 largest Pittsburgh-area employers. It has nothing to do with actual city residents and just shows the number of full-time equivelants employed by each company within the 7-county area. So, MH, I'd think that covers beyond a 40-mile radius.

Tuesday, July 26, 2011 12:04:00 PM  
Blogger C. Briem said...

The table is labeled "City of Pittsburgh" fwiw... What relevance is a list of non city located jobs being filled by non city resident workers? Alas.

Tuesday, July 26, 2011 12:09:00 PM  
Anonymous MH said...

Infy was trying to warn us about poorly labeled tables, but we didn't listen.

Tuesday, July 26, 2011 12:20:00 PM  
Anonymous Corey said...

Sarcastic voice: Chris, I think a great topic for a future post would be about people confusing Pittsburgh city proper with the region.

Tuesday, July 26, 2011 12:27:00 PM  
Anonymous MH said...

Are you going to keep the report posted? I'd like to be able to point to page 21 (pdf page 27) whenever somebody restarts the talk about the horrors of a state pension take over.

Tuesday, July 26, 2011 12:40:00 PM  
Anonymous MH said...

Bond buyers be bearish 'bout buying Burgh bonds.

Wednesday, July 27, 2011 1:08:00 PM  
Anonymous Anonymous said...

Refunding FAIL.

Thursday, July 28, 2011 10:12:00 PM  

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