George Friedlander Examines Dramatic Changes in Municipal Bonds

George Friedlander, managing director and chief municipal strategist at Citi Investment Research & Analysis

George Friedlander, managing director and chief municipal strategist with Citi Investment Research & Analysis, has almost four decades of municipal credit experience. He has received awards from the Securities Industry and Financial Markets Association and has repeatedly been named to Institutional Investor‘s All-America Fixed-Income Research team. The past year has seen some dramatic developments play out in his area of expertise.

2011 got off to a rocky start in the municipal bond market as echoes from the European sovereign debt crisis and the expiration of the Build America Bonds program were just two of several factors contributing to high volatility. Throughout the year, Friedlander was quoted in several news stories covering the extraordinary market uncertainty facing the municipal bond sector.

Another influence on municipal bond volatility was what the Chicago Tribune described as “panic selling that was set off by a ‘60 Minutes’ interview with Meredith Whitney” occurring in December 2010. Ms. Whitney, who is founder & CEO of Meredith Advisory Group, is frequently mentioned opposite Friedlander and Citigroup — Joe Weisnethal of Business Insider went so far as to describe the relationship as a “feud,” noting that “Meredith Whitney made her name by (correctly) trashing Citigroup.”

Meanwhile, Friedlander was one of three Citigroup analysts who pointed to US$800 billion in municipal bonds left uncounted by the Federal Reserve to explain unusual activity in the municipal bond market: by underestimating the size of the market and discounting the contribution of individual investors, the Federal Reserve risked overlooking the impact made by spooked retail investors responding to bad news.

Towards the end of 2011, as some of the worst doomsday scenarios failed to materialize, the outlook for municipal bonds seemed a little brighter. In October, Friedlander told CNBC that “we’re going to see a handful of middle-sized or smaller communities have true credit crises, but only a handful,” and a November Bloomberg article reported that Citigroup expects U.S. municipal-debt issuance to rebound in 2012.

George Fredlander will be discussing The “New” New Municipal Bond Market: What Has Really Changed? at the 65th CFA Institute Annual Conference in Chicago on 6–9 May 2012. Investors interested in Friedlander’s insights into credit concerns and portfolio strategies in the current challenging environment, and financial professionals seeking to understand the threats to the tax-exempt status of municipal bonds, will be able to hear from him in person at the event. Register to attend the event online, and follow this blog for more speaker updates as the conference draws closer.

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One Response to George Friedlander Examines Dramatic Changes in Municipal Bonds

  1. Frank says:

    Janet Tavakoli has clearly pointed out that Meredith Whitney takes credit for predictions she didn’t make. Tavakoli says that in the early part of 2007, Meredith Whitney appeared on Cavuto on Business with Jim Rogers and opposed his viewpoint. She rated Citigroup “sector perform.” Rogers was short. By the end of October 2007, three other prominent analysts already had a sell on Citi; Whitney followed by rating it sector underperform and said Citigroup could trade in the low ‘30’s and would have to cut its dividend. The dividend cut was a good call. Rogers made it months earlier when he shorted the stock. It was too late to give an early warning about Citigroup’s toxic assets. Securitization had already ground to a halt, and everyone was taking losses. Citi hit $5 in January 2009, just as Rogers said it would.

    Tavakoli says that Jim Rogers also warned about Lehman when Bear Stearns imploded in mid-March 2008, but Meredith Whitney continued to rate Lehman outperform. Whitney downgraded Lehman to “perform” at the end of March 2008—so much for taking a hint or issuing an early warning. Lehman went under September 2008.

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