Barron's Cites Evercore Wealth Management Muni Research on New York Debt

June 15, 2010

Barron's reporter Randall Forsyth cited research by Evercore Wealth Management municipal research team in the article "Avoiding Pension Hell for Munis".

Despite its budget woes, New York actually is one of the better states in terms of its pension liabilities, said Barron's,quoting a report by Howard Cure, director of municipal research for Evercore Wealth Management of New York. Indeed, New York was among only four states with fully funded retirement systems as of 2008, the report said (along with Florida, Washington and Wisconsin).

The article quoted Cure as suggesting several investments tatics for muni investors to deal with the risks posed by public pension funds:

Bonds backed by specific revenue streams, such as sales or personal income taxes, with the debt service on the securities getting first dibs. Cure cited the New York City Transitional Finance Authority, backed by the city's sales- and income-tax revenues in a strong legal structure that segregate them from general credit risks of the state and city of New York;

Essential-service revenue bonds, such as for water, sewer or electric utilities;

Bonds issued by private colleges and universities. Universities with substantial endowments and that are broadly attractive to students provide strong bondholder protection;

Finally, states with stronger pension funding, which as noted includes New York. Illinois and New York finally have begun to address their pension problems, Cure says, while Colorado and Minnesota are challenging existing retirees' benefits. "There is hope for progress in other states as well," he said.

To view a copy of the report "Coping with Unfunded Pension Liabilities", click here. Alternatively, contact Howard Cure at cure@evercore.com.