Smith's Research & Gradings

Q3 Ratings Upgrades and Downgrades

The High Grade Municipal Bond Portfolio managers basked in the warm sunshine of steady credit quality while high-yield municipal bond funds saw massive outflows.

Mark Paris, CIO, Head of Municipals at Invesco, hosted an investor call on March 30, 2020. Eddie Bernhardt, head of managed accounts joined him for the presentation.

Invesco purchased Rochester Funds last year and 2019 was a period of consolidation after the acquisition. The newly combined entity has over $60 bln. in Municipal Assets Under Management. Mr. Paris heads up a municipal bond team that includes 15 portfolio managers including Jim Phillips, Jack Connelly and Scott Cottier. Invesco's municipal credit research is lead by Mark Gilley, CFA (27 years of experience) and the team includes Angela Uttaro, Mark Stockwell, Mary Jane Minier, and Robert Bertucci. The Quant Research & Portfolio Analytics are lead by Casey Ryan and Michal Milewski.

Invesco emphasized the demand for tax-exempt municipal bonds had experienced unprecedented growth. The reasons for the record weekly inflows were due to a myriad of factors, starting with the Trump Tax-Reform's elimination of State and Local Tax Deductions. Falling interest rates and collapsing credit spreads contributed to a strong performance for municipal bond funds.

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Treasury Secretary to Close COVID-19 Lending Facilities

On Thursday, November 19, Treasury Secretary Mnuchin sent a letter to Fed Chair Powell indicating that he would be allowing most of the Fed's 13(3) emergency lending facilities to expire at year-end, and requesting that the Fed "return unused funds to the Treasury" in order for Congress to "re-appropriate $455 billion, consisting of $429 billion in excess Treasury funds for the Federal Reserve facilities and $26 billion in unused Treasury direct loan funds."

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Will Infrastructure Promises Meet Expectations

Targeted Infrastructure programs will be one of the featured revitalization tools used for stimulating growth in the US economy post the COVID-19 pandemic. Many observers have anticipated massive large-scale infrastructure programs, but that may not be viable at this time, given the financial capabilities of many state and local governments.

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Treasury Launches State & Local Recovery Funds

The US Treasury launched the Coronavirus State and Local Fiscal Recovery Funds, established by the American Rescue Plan Act of 2021, to provide $350 billion in emergency funding for state, local, territorial, and Tribal governments.

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