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Weekly UpdatesMBIA Inc. and The Bond Buyer recently released the results of their 2004 Municipal Market Outlook Survey, indicating widespread optimism about the performance of public finance markets this year. More than 300 professionals--including investment bankers, government officials, bond counsel, institutional investors, and financial advisors--participated in the survey.
The results show that 93 percent of the respondents expect market volume for long-term municipal bond sales to exceed $200 billion this year, compared to 64 percent in 2003 and 41 percent in 2002.
In general, respondents anticipate solid economic growth. Sixty-three percent believe the Dow Jones Industrial Average will be at 10,000 or higher at the end of 2004, and 88 percent believe that it will be at least 9,500.
A large majority of the respondents, 72 percent, expect the Federal Reserve to raise interest rates. Ninety-two percent believe the Fed's next move will occur sometime in 2004, while only 8 percent believe it will occur in 2005 or later.
Respondents are divided about whether the market will ever see another straight Tobacco Settlement securitization. Twenty-seven percent believe that it will, 39 percent believe it will not, and 34 percent say they do not know.
Sixty-three percent believe the level of disclosure about state and local governments' exposure to swaps and other derivative agreements is insufficient. In terms of who bears most of the responsibility for improving this situation, 52 percent feel it should be issuer officials, 24 percent financial and swap advisors, and 21 percent bond counsel.
A large majority of the respondents, 70 percent, believe cities should balance budgets by cutting expenditures rather than raising taxes, which received only 30 percent of the votes.
Finally, respondents were asked about the upcoming presidential election. Nearly half of the respondents, 42 percent, predict that Howard Dean will be the Democratic nominee for president. Dean was followed by Wesley Clark (20 percent), Richard Gephardt (15 percent), and John Kerry (12 percent).
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