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The tobacco bond sector ran into strong headwinds this week. Headline litigation risk has increased significantly. The $10.1 billion ruling against Altria in the Miles case drives the point home. How does this affect the outlook for the sector? How does this VA issue stack up against previous tobacco issues?

This has become a familiar story in the utility sector this year: an otherwise well-run basic electric utility with a strong service area ventures into independent power production and ends up with unfortunate results. Is the worst over for TECO and its operating subisdiary Tampa Electric? We assign our own rating and assess the bonds' relative trading value.

Plaquemines LA Port, Harbor & Terminal

727524

Much has transpired in the tobacco arena since Wisconsin opened the supply floodgate last May. We update the credit and assess its relative value versus the more recent issues, particularly in light of the State's plan to tender the bonds.

On the heels of the Golden State issue, record spreads were required by the market to absorb this second tobacco installment from New Jersey. If you've been keeping your powder dry in this sector, is this the time to participate? If you already own tobacco bonds, what is the outlook for the sector? We analyze the risks, assign an independent rating to the bonds and assess their relative value.

Continental Airlines Corp. Special Facilities Bonds

With the airline industry facing its greatest financial crisis ever, how does Continental Airlines stack up against other major carriers? Will it be among the ultimate survivors? We rate the bonds and examine in details the security features underlying two major tax-exempt Special Facilities bond issues for Houston and Newark Airports.

New Jersey EDA

64578C

Massachusetts G.O.

Like every other major State, the Commonwealth of Massachusetts is struggling to resolve a severe budget deficit. What are the near-term prospects for the State? What are the relative values between local issues and State bonds? More importantly, how should one approach the upcoming $900 million new issue from the State? We assign an independent rating to Massachusetts and review various trading strategies.

575827

Nevada Power Update

Recent events continue to be positive for the bondholders of Nevada Power and its parent Sierra Pacific, although its common shareholders might be singing a different tune. This week’s successful sale of a $300 million convertible issue should further strengthen bondholder protection, even as the equity took a 17% hit on potential dilution. We review yearend earnings and take another look at the relative trading value of the Clark County issue.

Since we put out our “Speculative Buy” recommendation on all TXU-backed tax-exempt debt in October, 2002, the bonds have outperformed strongly and we now view them as fully valued again. With the recent announcement of a stunning $4.2 Billion write-off from the European operations, the prospect for further short-term improvement appears limited. As a result, we have changed our recommendation on the bonds to a “Hold”.

Sabine River Authority

UAL Corp. Special Facilities Bonds Update

The outlook for a successful re-emergence from bankruptcy on the part of UAL has become considerably more clouded in recent days. The surprise announcement of a larger-than-projected operating loss a few days ago has also fueled market anxiety over UAL’s prospects. As a result, UAL paper has started to trade down again. We revisit UAL’s short-term outlook and make trading recommendations on selected UAL Special Facilities issues: SF Airport, Indianapolis.

Indianapolis Airport Authority, Ser1995A

SPECIAL REPORT: "Dividend Tax Reform and the Credit Markets"

The combination of credit worries, rising supply and tax reform uncertainty is weighing heavily on the muni market. As a result, this issue set a new high water mark in yield for a high grade name. For the individual investor, this should present an attractive income opportunity. As usual, we assign our own rating to the bonds and pick out the most attractive maturities.

The City finally came to market this week with a relatively successful bond offering. We update the credit outlook and discuss why "this will not be 1975 all over again" and what constitutes attractive value for NYC paper.

In December, the rating agencies finally followed our lead and downgraded the State. As a result, yield spreads on CA paper have widened out dramatically. What's the outlook for the State, given the Governor's recent budget message? More importantly, what's next for the CA muni market? We update our opinion and discuss various trading strategies. 

Now that this record-breaking muni deal has come and gone, what are the factors that may drive the credit in the near future? Are the bonds still an attractive relative value? We take an objective look at this benchmark issue.

Is NYC heading for fiscal disaster once again? We discuss why things are vastly different than a generation ago and why NYC bonds currently appear to be attractive relative values.

As we predicted, UAL bonds weakened again going into the debt repayment date of 12/02/02. UAL has elected to use the 10 day grace period on its public debt. We discuss all the potential scenarios for UAL going into the Machinists' vote on 12/05/02 and beyond.

City of Chicago (O'Hare Airport) Ser1999

City and County of Denver, Ser1992A

Indianapolis Airport Authority, Ser1995A

We believe the 3rd quarter will be looked back upon as the beginning of NVP's financial recovery. However, since the bonds have reached and surpassed our target spread, we have also revised our trading recommendation to "Hold" from "Speculative Buy"

Now that the election and the record CA DWR deal have come and gone, has anything changed in the State's fiscal outlook? We update our opinion and discuss recent trading patterns for the G.O. bonds.

We report on final Q3 results for TXU Energy and explain why we view the tax-exempt put bonds as a particularly attractive relative value right now.

Sabine River Authority

Given this week's announcements, is UAL out of the woods? We update our opinion of the credit and lay out various trading strategies designed to take advantage of the recent rebound in airline bond prices

City of Chicago (O'Hare Airport) Ser1999

City and County of Denver, Ser1992A

Indianapolis Airport Authority, Ser1995A

We report on Q3 earnings, assess current relative valuation and discuss how WMI might potentially benefit from the recent election results. Concerns about the put feature are also raised.

Ohio Water Development Authority

The relentless supply of tobacco bonds is starting to create indigestion in the muni market. The State of WA has been forced to pay historically high rates for its deal. For the individual investor, this should present an attractive income opportunity.
We assign an independent rating to the bonds and pick out the most attractive maturities.

The potential bankruptcy of beleaguered UAL Corp.is a widely anticipated event. The purpose of our report is not to rehash UAL’s well-documented financial problems  but rather to examine certain probable financial scenarios for the next few quarters and explore what trading strategies might be appropriate for current holders as well as potential speculative buyers of the carrier’s tax-exempt debt. Because security features differ significantly from issue to issue, our reports are issue-specific.

City of Chicago (O'Hare Airport) Ser1999

City and County of Denver, Ser1992A

Indianapolis Airport Authority, Ser1995A

WY 3rd quarter earnings were down 81%, yet the bonds remain fairly well bid. We update our opinion on the credit and assess current relative valuation.

The revenue bonds for this recently opened toll road in the Richmond area are trading at an 8.35% tax-free yield, despite Baa3/BBB- ratings from the rating agencies. In this report, we discuss the credit's near-term outlook and assess its relative value merits based on our own independent rating (10/18/02)

Since TXU disclosed their European earnings problem on 10/9/02, their stock is down 70%
and their bonds are off 15-20 points. We recommended a "sell" on this credit back in August.
This report updates our credit opinion and re-assesses the bonds' relative valuation at current levels. The "put" feature found in the tax-exempt bonds is also discussed.

Sabine River Authority

Has MSMC turned the corner after a disastrous 2001? We examine the Hospital’s near-term outlook, assign an independent rating to the Bonds and point out the best relative value among the different maturities.

This tobacco offering from the State of New Jersey set a new size record for the tobacco settlement sector. We analyze key credit features and point out which bond maturity represents the best value in our opinion.

With 2003Q2 results out of the way, company liquidity is improving and bankruptcy is no longer imminent. We re-examine our relative value recommendation on the bonds.

Given the State's huge $24Billion budget deficit, we assess the likelihood of a rating agency downgrade after the November election. Supply conditions in the CA market are also discussed, including the record-breaking CA Dept of Water issue slated for November.

Even though all tobacco issues generally share the same credit features, local issues such as this one are subject to additional risk factors. We assign our own rating to the issue and pick out the best relative value among the various maturities.

After WorldCom, companies like Waste Management who have already been chastised for their accounting problems may ironically attract greater investor interest. We rate the bonds and assess their relative value at current spreads.

While all tobacco-settlement issues at the State level share essentially the same credit characteristics, we demonstrate why a multi-tiered market will develop in this sector.

Find out why we revised our opinion from an "Avoid" to a "Speculative Buy".

Even though all tobacco settlement issues essentially share the same credit features, we show why bonds issued by the so-called Previously Settled States should rank senior to all other tobacco deals.

Sabine River Authority

The Altria Group (MO), formerly Phillip Morris, is a study in contrasts. It is a very large, stable, consumer products business with strong profit margins and great credit strength. At the same time, the company’s tobacco business exposes it to significant short and long-term credit risks, primarily event risk from smoking and health related litigation. This week, the market was shocked by the recent re-filing of the 1999 Federal case seeking $289 billion from cigarette-makers. We assign a rating and review the outlook for this credit, as it relates to the Master Settlement Agreement with the States.

On 02/18/03, Waste Management Corp (WMI) released its 2002 results and its outlook for 2003. Moody’s suddenly discovered “the strength and stability of WMI’s cash generation” and put them on review for an upgrade. We review the Company’s full year results and discuss why we think it will take a long time before WMI can regain investment-grade status.

The outlook for a successful re-emergence from bankruptcy on the part of UAL has become considerably more clouded in recent days. The surprise announcement of a larger-than-projected operating loss a few days ago has also fueled market anxiety over UAL’s prospects. As a result, UAL paper has started to trade down again. We revisit UAL’s short-term outlook.

Once again, Street analysts were caught by surprise by GP's latest earnings warning, especially with regard to potential asbestos liabilities. While we have been much more pessimistic than the Street about GP's short-term financial outlook, we have also been less concerned with the asbestos problem. Find out why we still think there's good value in GP bonds right now.

We report on Q3 earnings, assess current relative valuation and discuss how WMI might potentially benefit from the recent election results.

The potential bankruptcy of beleaguered UAL Corp.is a widely anticipated event. The purpose of our report is not to rehash UAL’s well-documented financial problems and their day-to-day changes but rather to examine certain probable financial scenarios for the next few quarters and explore what trading strategies might be appropriate for potential speculative buyers of the carrier’s debt.

WY 3rd quarter earnings were down 81%, yet the bonds remain fairly well bid. We update our opinion on the credit and assess current relative valuation.

Updates our credit opinion in response to TXU's decision to sell their UK operation to E.On Corp. on 10/21/02

Since TXU disclosed their earnings problem on 10/9/02, their stock is down 70% and their bonds are off 15-20 points. We recommended a "sell" on this credit back in August. This report updates our credit opinion and re-assesses the bonds' relative valuation at current levels.