Bonds
Intermediate Bond ETFs: Hedging Benefits and More
2024-12-05
When it comes to the complex world of fixed income durations, investors often find themselves at a crossroads. Many have been cautious and stuck to shorter-duration bonds, but there may be an opportunity waiting in the wings. In the December edition of The BEAT, the Eaton Vance team made a significant move by overweighting duration in their portfolios. This decision has sparked much interest and debate among investors.

Opportunity in Longer Portfolios

Eaton Vance highlighted how bonds could play a stronger hedging role next year, particularly in relation to U.S. equity and cyclical exposure. The team pointed out that 10-year U.S. treasuries have reached yields that make significant further upside unlikely. "With the recent rise in rates, we have moved duration to overweight as we believe further upside in yields is limited," they explained. Looking at yield curve decomposition data, expected short rates remain above the Fed's terminal rate while inflation has stabilized just above target levels. Term premiums have also approached decadal highs over the past month.

Benefits of Intermediate Bonds

Investors seeking to build up their intermediate bond exposure should consider the Eaton Vance Intermediate Municipal Income ETF (EVIM). This fund provides a low-cost way to access an active intermediate muni portfolio with a net expense ratio of only 0.10%. Intermediate-duration bonds offer distinct advantages over shorter and longer-term bond options. For instance, intermediate munis have maturities that are long enough to avoid the reinvestment risk of short-duration bonds. At the same time, they face less long-term interest rate risk compared to long-duration bonds.The vast majority of bonds within EVIM have a credit rating of AA or higher. This high credit quality offers much less risk of default compared to lower-rated bonds. The muni bond portfolio also provides diversified access to a wide variety of sectors, including the hospital, transportation, and housing sectors.

Hedging and Income Generation

In addition to its hedging benefits, EVIM can help build income for the long-term. As of October 31, 2024, the fund has a distribution yield of 3.73%. This makes it an attractive option for investors looking for both stability and income. By investing in EVIM, investors can gain exposure to a diversified portfolio of muni bonds that offer the potential for both capital appreciation and income generation.For more news, information, and analysis, visit The ETF Yield Channel. Investors can stay informed about the latest developments in the fixed income market and make more informed investment decisions.
St. Pete Council Votes for Rays Stadium Bonds; County Vote Next
2024-12-05
The St. Petersburg City Council's Thursday vote to approve bonds for the new Tampa Bay Rays stadium in the Historic Gas Plant District was a significant moment. After weeks of stalled progress on a July-approved deal, the council's 4-3 decision now shifts the focus to the Pinellas County Board of County Commissioners, who will vote on December 17.

Urgency and Deliberation

During the open discussion among council members and citizens, the vote was ultimately in favor. Council member Gina Driscoll's indication of support ahead of the vote, emphasizing the Rays' lack of a termination letter and her own commitment, played a crucial role. This assured the passage of the vote.The Rays had previously indicated the deal was nearly dead due to increased costs from the bond approval delay. Council member Brandi Gabbard, who voted yes, saw approving the bonds as calling the Rays' bluff and forcing them to adhere to the initial deal rather than seeking a restructuring.Mayor Ken Welch spoke to the council before the vote, urging them to approve the bonds. He had met with the Rays and team owner Stu Sternberg earlier in the week, and the consensus was that the July agreement on the new stadium still stood.The Pinellas County commissioners have twice delayed a vote on funding for the new stadium. Hurricane Milton's devastation on October 10 made Tropicana Field unplayable in 2025, leading the Rays to play at Steinbrenner Field in Tampa next season with uncertainty about their future beyond that. A November damage assessment report estimated it would cost over $55.7 million to fix Tropicana Field for the 2026 season.Speakers at the meeting were divided on whether the council should approve the bonds. The Rays were not in attendance, but Council member Lisset Hanewicz noted their absence, highlighting the importance of in-person communication in a partnership. City administrator Rob Gerdes later clarified that the Rays had offered to attend but were not required.The implications of this decision are far-reaching. It not only impacts the future of the Tampa Bay Rays but also the economic and cultural landscape of St. Petersburg. The new stadium is expected to bring jobs, tourism, and a boost to the local economy. It also represents a significant investment in the city's infrastructure and future.As the Pinellas County commissioners prepare to vote on December 17, the fate of the new stadium hangs in the balance. The Rays will have to decide whether to seek alternative funding or return to the negotiating table. The city of St. Petersburg and its residents await the outcome with bated breath.The decision to approve the bonds was a complex one, weighing the interests of the Rays, the city, and the county. It required careful consideration of the financial implications, the impact on the local community, and the long-term prospects of the stadium. It remains to be seen how this decision will unfold in the coming months.
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St. Petersburg Council Approves Bonds for Rays Stadium & Gas Plant
2024-12-05
The City Council of St. Petersburg took a significant step on Thursday by approving bonds to fund a substantial portion of a $1.3 billion stadium for the Tampa Bay Rays and the surrounding Historic Gas Plant District. This decision, which came with a 4-3 vote, now places the responsibility on the Pinellas County Commission to potentially have the final say on the deal. The commission's decision could either lock in the Rays and its development partner Hines with the cost overruns the team now claims it can't afford or leave a $312.5 million gap in the project.

Delays and Tensions

During the previous council meeting on November 21, Council member Gina Driscoll pushed for a delay, emphasizing the need for the city to take a breath. Tensions had escalated at that meeting as Rays president Brian Auld indicated that the deal was dead. However, it later emerged that the Rays were still in the deal, and Driscoll urged the county to fulfill its part and see it through.The uncertainty regarding whether the Rays could fulfill their end of the deal approved in July continued to loom. Team presidents Auld and Matt Silverman wrote a letter before a commission meeting last month stating that the club could no longer afford to open a ballpark in 2029, a year later than planned due to delays in the bond votes. This led to the county and city delaying their votes and engaging in a back-and-forth in correspondence between the commission chairperson and the Rays.

Mayor's Perspective

Before the council's vote, Mayor Ken Welch, the architect of the deal, revealed that Rays owner Stuart Sternberg attended a meeting at City Hall on Tuesday. He stated that there is "consensus" that the agreements approved in July are "valid and in effect," although significant issues still remain regarding the Rays' stadium obligations. The discussions during the meeting were productive, and the options are becoming clearer.

City Administrator's Insights

City Administrator Rob Gerdes focused on the funding gap that the Rays "perceive." He suggested that the private sector could fill in these gaps through suite and name sponsorship rights. However, he also emphasized that the city cannot financially make up that gap.

Council Member's Concerns

Council member Lisset Hanewicz, a strong critic of the deal and its legal language, was disappointed that the Rays were not present during the Thursday vote. Gerdes stated that the Rays offered to attend but he believed it wasn't necessary. Hanewicz had spoken to Silverman and was told that the Rays decided not to come. She expressed her concern, stating that the deal started with a letter from the Rays and questioned how the city could approve hundreds of millions of dollars of bonds when the Rays were not present and sending out such letters.This is a developing story, and readers are encouraged to stay with tampabay.com for updates.
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