Standard & Poor's

Monthly Municipal Market Summary

October 2011

National, GO, Par Bond,Current Call Yield Curve
	AAA	Ins	BBB	Ins Zero
5 yr	1.49	1.92	3.68	2.30
10 yr	2.77	3.92	4.98	3.77
15 yr	3.33	3.85	5.33	4.40
20 yr	3.74	4.29	5.64	4.77
25 yr	4.16	4.70	5.86	5.13
30 yr	4.26	4.79	5.94	5.18

Yield Differential From Previous Month
	AAA	Ins	BBB
5 yr	-0.42	-0.35	-0.20
10 yr	-0.31	0.49	-0.06
15 yr	-0.22	-0.14	-0.06
20 yr	-0.10	0.00	-0.01
25 yr	0.00	0.06	0.11
30 yr	0.04	0.07	0.13

Coupon Spreads for Insureds (Assumes - callable to 2019 at 100 with 25 basis point OID)
	4.00%	4.25%	4.50%	4.75%	5.000%	5.25%	5.50%	5.75%	6.00%
30 yr	5.10	4.91	4.89	4.87	4.79	4.79	4.74	4.67	4.59

Key Financial Indicators
US 30 Yr Treas Yield	4.20%
US 10 Yr Treas Yield	3.20%
DJ Industrial Average	10344.84
Nasdaq	2144.60
S & P 500	1095.63

PreRefunded Scale (Mid Year, Rerated)
2010	0.27
2011	0.53
2012	0.81
2013	1.06
2014	1.41
2015	1.74
2016	2.06
2017	2.35
2018	2.61
2019	2.82

General Market Comments: Municipal hi-grade bonds performed well in November. As in October ample cash and a very manageable supply pushed yields lower. In a quest for more yield buyers crept further out the curve than last month. Also with a historically steep curve more attention was being paid to the particular maturity month. For the month money market yields, already extremely low, dropped about seven basis points. Five and ten year maturities, however, had yields fall thirty five and twenty five basis points respectively. Yields dropped less the further one extended out the curve with fifteen year rates falling fifteen, twenty year rates about ten and long maturities more or less flat.

High Yield Report: In November, the municipal high yield market underperformed high grades returning -0.18% as measured by the Standard & Poors/Investortools High Yield Index vs. +0.699% return on the investment grade index. The health care sector priced four new issues totaling approximately $94 million. The largest deal was issued by Massachusetts Development Finance Agency for a Senior Living Facility (Groves-Lincoln project) for approximately $34.75 million at +370 bp over the AAA scale maturing in 2044. The land sector was relatively flat. The sector saw five new issues come to market totaling approximately $38 million. The largest issue priced in Alabama (Country Crossing project) for approximately $21 million at 10.50% in 2039, +617 bp over AAA scale. Weaker projects in Florida, either missing or drawing on the DSRF to cover their November debt service payments, saw prices fall while average projects were up approximately 10-15 bp. In the education sector, a technical college issuance by Brevard County Florida totaled $59 million rated ‘BBB minus’ was priced to yield 7.00% in 2039, approximately +275 bp over the AAA scale. This was the largest ‘BBB minus’ rated college issuance to come to market since August 2008. In the secondary market, non-rated AMT housing issues were down 10-30 bp based on size trades. The IDR sector had two new issues of note come to market. The first was a composite deal for International Paper totaling approximately $102 million rated Baa3/BBB priced at 6.25% with a term due in 2033, +214 bp over AAA Scale. The second issue was for US Steel in Allegheny County, totaling $129 million rated Ba3/BB and priced at 6.875% with a max yield term due in 2030, +297 bp over AAA Scale. In the secondary market, prices dropped significantly for unsecured American Airlines based on weaker bids and trades and closed the month down on average from 9-12 points.

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