By Gayl Mileszko
Millions, Billions and Trillions
Who doesn’t dream about winning a several hundred-million-dollar lottery? Every time the Powerball gets close to $1 billion, we can’t help but start making a list of all the great things we could do for our family, friends and charities if we won. Boy, would it be great to pay off all the debts that have weighed us down, not worry about the price of eggs, maybe indulge ourselves with a horse ranch, a fast car, or a cruise around the world. Even if we have earned tidy sums by building a business, inventing a must-have gadget, or investing in a stock that went to the moon, we still imagine ourselves taking that big lump sum and putting it to much better use than that schlub who won last time. Sometimes, standing in front of an ATM, we also have this crazy hope that we will get lucky, that the machine malfunctions and spits out hundreds and thousands of dollars until it is empty and our bags are full. That might, we think, make up for all the times we were overcharged, overtaxed, overdrawn, and overwhelmed.
Fat Fingers
Last April, a guy went on line to check to see if a $280 deposit got credited to his savings account. Imagine the look on his face when he saw a big error. The posting was not for $280, or $28, or $2,800 or even $280,000. It was for $81 trillion. Yes, trillion. As the New York Times put it, that “dwarfed the gross domestic product of every country in the world.” The goof occurred at Citigroup, which had already been taken to the woodshed by regulators for some of the biggest blunders in bank history. Readers may recall two “fat fingers” mistakes made by its employees in recent years. One goofed big by sending a wire for $900 million to Revlon lenders instead of the $7.8 million interest payment that was due. It took two years of court battles to get that money back. Then a trader added an extra zero to a ticket that sparked a $322 billion European stock selloff. So much for the “six eyes protocol” that requires three people to make, check and approve such transactions. Fines levied by U.S. and British regulators for data and risk management failures by Citi have run into the hundreds of millions. At this writing, its market cap is $136.3 billion.
Federal Buildings For Sale
There are more than six eyes pouring over the books and records of the federal government. The Department of Government Efficiency has about 20 staff based in the Executive Office Building adjacent to the White House, and 4 more located in each federal agency: a lead, an engineer, a human resources specialist and an attorney. The official DOGE website includes a “Wall of Receipts” claiming that it has already saved taxpayers an estimated $105 billion in contracts, grants, and real estate. In addition to terminating leases for privately owned buildings used by federal employees, on Tuesday the Trump Administration posted 443 “non-core” federal properties for sale as part of an effort to save $430 million in annual operating costs.
Peace Talks and Paper Straws
In his March 4 address to Congress, President Trump said that he is “just getting started.” It was longest presidential address on record, just another in a long line of record-setters less than seven weeks into his second term. He and his team have been rolling out initiatives, orders and actions at a prodigious pace. Policies on everything from Ukraine to crypto, tariffs and shipbuilding, border security women’s sports, the English language and paper straws, NATO, landmarks and collective bargaining. Budget negotiations are still underway and tax reform has yet to be tackled. These issues have engaged the entire municipal bond market and public finance industry early in the legislative process. The timetables and outcomes are uncertain at this writing. However, it appears that congressional leadership is moving toward a clean extension of federal funding through September 30, leaving debate over major spending reductions to Fiscal Year 2026. The partisan divides and personal attacks, however, bring into question whether consensus can be reached ahead of a government shutdown, a third sovereign rating downgrade, and a Treasury payment default. In the meantime, many senior living and care as well as charter and private school operators, among others, are following with great interest the impacts of the tariffs on steel, lumber, and gypsum just now taking effect, as well as progress on the federal budget, reconciliation measure, and tax reform.
Troubles, Bubbles, and Stumbles
Markets, as expected, are volatile amid all the uncertainty: war and peace and relations with European allies; the direction of inflation and condition of labor, Treasury and fed funds rates; talk of super bubbles in the stock market; lack of agreement on federal funding and the debt limit; wild swings in crypto prices; and the daily barrage of news, and depth of policy upheaval, from the White House. Margin trading has surged to unprecedented levels at $937 billion up 33% from a year ago. The Atlanta Fed now has a negative GDP forecast for the first quarter of 2025 as a result of weaker than expected personal consumption and higher than projected trade deficit. Traders will be closely following this week’s jobs data, Beige Book, construction spending and durable goods numbers as well as corporate earnings reports from retailers including Costco and Target. Investors will also keep an eye on the 7 Treasury auctions planned, and an ear to the statements being made by nine Federal Reserve officials ahead of the March 19 press conference and dot plot release.
February Municipal Bond Slate Largest Since 2020
The second month of the year came to a close last Friday. It has been a wild ride of late for stocks and commodities. Bitcoin prices have plunged this year from $106,000 to $83,600. Year-to-date, the ICE BofAML indices for taxable municipal bonds (+3.85%), mortgages (+2.97%), Treasuries (+2.81%), non-rated munis (+2.23%), high yield corporate bonds (+2.04%) and high yield munis (+1,73%) are outperforming the Nasdaq composite (-2.31%) and S&P 500 (+1.44%). Multi-family housing bonds (+1.91%) and the 7-to-12-year muni tenor is up +1.75% since the start of the year. Demand for tax-exempt municipals remains strong. Lipper reports that there have been $6.03 billion of net inflows into municipal bond mutual funds and exchange traded funds. Tax-exempt money market fund assets now total $134.8 billion. Issuance remains heavy as a result of pent-up financing needs, the threats to tax-exemption floating around, and attractive rates. The $38.8 billion of sales totaled the most for a February since 2020, when the 30-year MMD benchmark yield was 1.52%. The 30-year AAA general obligation benchmark yield now stands at 3.93%, still quite favorable to non-profit borrowers. The amount of principal and interest payments made to muni bondholders available for reinvestment in new issues is, however, declining. After a total of $87.1 billion hit accounts in January and February, only $48.5 billion is expected in March and April.
HJ Sims in the Market
HJ Sims is in the market this week with our $237 million non-rated multi-state financing for ISF-Ativo Senior Living. We are bringing $134.9 million through the Arizona Industrial Development Authority and $102.1 million through the California Public Finance Authority for new rental independent living, assisted living and memory care communities in Buckeye and Yuma, Arizona and Santa Clarita California. The $13.7 billion municipal bond calendar is at a high for the year and also includes a $118 million non-rated financing for Bella Vida Forefront Living in San Antonio, and student housing deals for the University of Indianapolis and Kennesaw State. Last week, HJ Sims brought a $16.7 million of non-rated Florida Development Finance Corporation bonds for the Florida Charter Educational Foundation; we priced the 2050 maturity at par to yield 6.89%. Among other financings, St. John’s Classical Academy in Orange Park, Florida sold $22.4 million of Ba2 rated bonds structured with a 2059 maturity that priced with a coupon of 5.25% to yield 5.30%, and Lakeview Academy sold $19.7 million of state enhanced Aa2 rated bonds through the Utah Charter School Finance Authority featuring a 2060 term bond priced at 5.00% to yield 4.77%.
Speaking Up for Your Causes
The $81 trillion Citi posting slipped past two of its watchdogs, but was caught 90 minutes later. No funds actually left the bank but the “near miss” had to be reported to the Fed and the Office of the Comptroller of the Currency. To help avoid any near misses, blunders or outright mistakes on the part of appropriations and tax committees, we encourage readers to join the advocacy efforts of organizations such as LeadingAge, the National Association of Bond Lawyers, or your state and national charter school and independent school associations. Reach out to your federal representative and senators as well to make your views known today. For more information on how you can help to make your views on tax-exemption, Medicaid, school choice, affordable housing, student housing, rural hospitals and other important issues known, please contact your HJ Sims representative. We will use this weekly update to keep you posted on every important development.
Fantastic Late Winter Senior Living and Charter School Conference in Fort Worth
We thank all who attended our 22nd Late Winter Conference at the Worthington Renaissance in Fort Worth, and helped to celebrate our firm’s 90th anniversary last week. What a tremendous series of speakers and panels, great networking – and fun activities — we had! With such a great crowd, we felt like we won a big lottery. Stand by. We will soon be posting photos, summaries and slides for those who joined us and will be sharing highlights for all readers. Please keep your feedback coming, and make sure you post us on your efforts in support of the Public Finance Network’s #builtbybonds campaign to save tax-exemption. If you were unable to participate in our conference this time, we invite you to hold the date for our next event at the Marriott Sanibel Harbor Resort and Spa in Fort Myers from February 24-26, 2026.