WHAT WE OFFER
Smith's Conference series provide unique forums for investors and issuers to discuss matters of mutual interest. They include, Smith's Affordable Housing Finance Conference, High Yield Municipal Bond Conference, State and Local Government Finance Conference, and Community-Based Healthcare Conference.
Smith's has become a bellwether research company, often predicting significant trends and spotlighting controversial subjects sometimes months before they come to light elsewhere. SMITH’s provides independent research and third-party analysis for institutional investors.
SMITH’s Grading scale provides a comprehensive and unified credit comparison that is consistently applied for all securities — from supranational organizations and sovereign risk gradings to sub-sovereign municipal entities and corporate credit analytics. It’s a principled and proven approach to credit analysis expressed on Smith’s universal scale.
Smith's Research & Gradings has the news and information you need to know as you continue your search for value in the municipal markets. Smith's is the premier source of independent credit evaluation within the municipal credit market.
Smith's is published every other week
Amtrack Disaster Underscores Need to Fund Hudson Tunnel
Amtrak's debilitation of Pennsylvania Station in Manhattan last week served to underscore the need to finance and construct a new tunnel under the Hudson River. Considered one of the most important transportation projects in the nation, the new tunnel is a major component of Amtrak's $24 billion Gateway Program to repair and expand its U.S. northeast transportation corridor.
The impact of the tunnel construction would be felt mostly around a one block area, just east of the heavily travelled West Side Highway and south of 30th Street. Under a 'cut-and-cover method' also used on other projects throughout the city, 30th Street would be dug up and covered over, so construction could continue underneath. It is expected to take seven years to finish.
New Jersey Transit is taking the lead by starting an environmental study. The Hudson River Park Trust and state historic preservation societies are being consulted to address concerns about the debris and rip-rack that form the Hudson River's edge.
S&P Downgrades Illinois Universities and Chicago Colleges
S&P took action last Thursday on $22 bln. of bonds relating to the financing of Illinois higher education schools, because Springfield lawmakers and Gov. Bruce Rauner may fail to agree on an annual budget by the scheduled end of the legislative session May 31.
S&P downgraded the State's largest institution, The University of Illinois, to A' from A+. S&P kept the rating three notches above the general state rating of BBB.
Southern Illinois University's credit rating was dropped into the junk level to BB from BBB, while ratings for Northeastern Illinois and for Eastern Illinois universities fell deeper into junk, at B from BB. Western Illinois University's rating was cut to BB- from BBB- and Governors State University's rating was downgraded to BB from BB+.
S&P also lowered the rating four notches to BBB from A+ for the City Colleges of Chicago, which operates seven community colleges. The colleges' credit hours dropped 22 percent from 2010-16. The ratings were placed on a watch list for a potential subsequent downgrades.
2006: Puerto Rico's Pension Problems
In 2006, Smith's 2nd Annual Pension and OPEB Conference featured Jorge Irizarry, president of Puerto Rico's Government Development Bank (GDB). Mr. Irizarry spoke at length about the problems facing Puerto Rico's pensions. "Nothing can be done about Puerto Rico's pension problems because the rating agencies are ignoring it. The GDB has commissioned studies to determine the size of the problem. Once we have the answer, we can take steps to address the matter," he said.
Mr. Irizarry explained Puerto Rico's pension obligations were likely to grow very quickly over the coming years. He described how three public sector plans represent the vast majority of the pension liability. What's more, the plans are significantly underfunded and he could not see any way forward to correct the problem.
Indeed. Moody's and S&P continued to rate Puerto Rico's debt in the Double-A category until 2013, when they downgraded the debt to BBB ratings in the span of six months.
In contrast, Smith's Puerto Rico Grade was put on alert for downgrade in 1996 when the U.S. government announced it was repealing Section 902 of the tax code, which provided companies with a subsidy for manufacturing in Puerto Rico.
S&P Drops Bomb On National Guarantee — Downgrade Shuts Down New Business
In early June, MBIA Inc. announced its response to a Research Update from Standard & Poor's Global Ratings, in which it placed the ratings of the Company and National Public Finance Guarantee Corporation (National) on CreditWatch Negative.
Bill Fallon, MBIA's Chief Operating Officer and National's Chief Executive Officer said, "We are disappointed by S&P's announcement and do not believe that a rating downgrade of National is warranted. National's financial strength is evidenced by $1.7 billion of excess capital above our estimate of S&P's AAA requirement. National has also, in a relatively short period of time, significantly increased its new business activity... This market acceptance has been growing despite an environment where S&P's rating on National has been one notch lower than its competitors. "
Last week, Mr. Fallon released a statement that said: Following S&P's downgrade of National's rating and with no clear path for the restoration of National's ratings to a level that would allow it to compete effectively, we have decided to abandon our efforts to actively write new business at this time.
SRG Puts Opiods on Credit
Should Opioids be included as a credit consideration?
Yes. Smith's Research & Gradings has decided the time has come to answer the question and put the epidemic of opioid use on "credit".
Stamford-based Purdue Pharma, the maker of pain-killer OxyContin, is the target of an increasing number of states, counties and cities suing the pharmaceutical firm, alleging it is partly to blame for the nation’s opioid epidemic.
So far, Washington D.C., Pennsylvania, Massachusetts, Vermont, Illinois, Texas, Georgia, Connecticut, South Dakota, Rhode Island, Alabama, Virginia, Wisconsin, Tennessee, Colorado, Indiana, Delaware, Iowa, North Carolina, Oklahoma, New York, and California have announced their participation publicly.
Like the tobacco case, which resulted in a $206 billion settlement, the opioid lawsuits seek recovery for state spending of Medicaid dollars on the addiction crisis and funds for education and recovery campaigns.
Smith's Cyber Gradings: US Seaports Vulnerable to Attacks
Smith's annual review of U.S. Seaports, as a critical infrastructure asset, has underscored vulnerabilities to cyber attacks as well as the intrusion of foreign operators/contractors.
The recent NotPetYa global cyberattack struck a number of companies around the world. Shipping operator Maersk, the owner of the world’s biggest container shipping company has revealed that the June cyberattack will wipe out up to $300 million in profits in Q3 2017. “Business volumes were negatively affected for a couple of weeks in July, and, as a consequence, our third quarter results will be impacted,” stated Maersk CEO Soren Skou in a statement.
In July, the shipping giant admitted that NotPetYa had affected operations in a number of ports around the world leading to a large backlog of shipments. At the time, the company did not quantify the impact of the losses, or put a figure on the cost on operations.
Hurricane Maria Wallops Puerto Rico
Puerto Rico was hit by Hurricane Maria last week. It landed as a category 5 storm along the Southeast coast of the island a little after 6 AM local time on Wednesday.
Sources on the island reported for as long as power and communication lines survived, but by Noon most of the island was eerily silent and without power.
"It is a humanitarian crisis," a Wall Street analyst said," but it may bring an economic boom to the regions once the rebuilding begins."
PROMESA, the federal control board overseeing Puerto Rico's finances, authorized up to $1 billion in local funds to be used for hurricane response, but Gov. Ricardo Rossello said he would ask for more.
"We're going to request waivers and other mechanisms so Puerto Rico can respond to this crisis," he said. "Puerto Rico will practically collect no taxes in the next month."
Federal aid began moving into Puerto Rico on Saturday. Local officials praised the Trump administration's response but called for the emergency loosening of rules associated with the Jones Act, which is long blamed for condemning the U.S. territory to second-class status.
A LITTLE ABOUT US
SMITH’s Research & Gradings is a financial credit grading company that conducts research and creates unique credit reports using its own proprietary grading system.
SMITH’s Research & Gradings provides research and disseminates credit gradings on securities sold both on a new issue basis as well as in the secondary markets.
SMITH’s Research & Gradings mission is to provide real-time intelligence that provides greater accuracy and predictability to decision-makers.
SMITH’s Research & Gradings written manifesto stated its raison d’être was to provide independent, principles-based credit analytics.
Over the past 24 years, SMITH’s Research & Gradings has constantly improved and enhanced its credit analytics to better serve investors.
CONNECT AND CONTACT
Smith's Research & Gradings, has become a bellwether research company, often predicting significant trends and spotlighting controversial subjects sometimes months before they come to light elsewhere. Smith’s provides independent research and third-party analysis for institutional investors. Smith's analysis is an indispensable part of Wall Street and the world's capital markets.
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