Our Priority is the Safety of Your Municipal Investment Portfolio

Municipal Investment Solutions

H. G. Nix Incorporated was formed in 1978 as a fully-licensed Broker/Dealer, specializing in municipal finance.  Primarily acting as a Senior Manager, Manager, or Financial Advisor, the Company has overseen more than $5 billion in municipal bond issues and project located within the State of Florida.

Most of the bond issues were for municipal infrastructure projects such as water and sewer systems, parking garages, performing arts projects, convention centers and related public purpose needs. A number of the financings funded such other public projects as airport facilities, sports related stadiums and port infrastructure. One of the most exciting and challenging projects we worked on was the financing behind the Florida Aquarium. It was so gratifying to bring that project to fruition and to see the impact on our local community.  Another very different but equally impressive project, was the financing behind the Kobernick House, an adult living facility in Sarasota, Florida, another visionary project which brought great impact to a splendid community.  We are grateful for having worked on these projects and so many more.

Credit Analysis For Individuals & Institutions

H.G. Nix Incorporated offers its’ services to both individual investors as well as institutional buyers of municipal bonds. With over 40 years of experience, the principals of H.G. Nix Incorporated have seen almost every type of municipal security issued. We have experience in state, county and municipal credits as well as statue created special authorities. From the security revenue stream the range is from general obligation bonds to all forms of municipal revenues, i.e., special taxes, parking fees, project financed revenues, etc.

Bond Funds versus Individual Issuers

90% of the portfolio of tax exempt bond funds are normally with 10 or fewer issuers. Thus, a negative credit situation with one of the large positions can affect the value of the entire bond portfolio causing a devaluation of the price. This why we recommend investors but individual issues of municipal bonds. Individual issues can be analyzed for credit worthiness and thus limiting a market risk to fluctuations in interest rates.

Municipal Credit Analysis

Most investors believe municipal bonds intrinsically are  a safe investment since the historical default rate has been very low. People acquire tax exempt bonds sensing there is no inherent risk with the investment product. State and local government bonds have been over the years a safe and sound investment. However, as with any investment there are risk factors. In addition, an investors’ profile as to length of maturity, investment goals and risk adversity change over time.

 

Currently the primary risk to investors of municipal bonds has become the complete underfunding of the state and local public pension plans. As the liabilities of the plans have increased, public pension managers have been forced to acquire riskier pension investment positions in an effort to increase the return on the pension fund, thus creating an increased risk to the pensions’ overall portfolio. Additionally, many of today’s higher yielding public pension investments are illiquid thus causing a higher burden on the overall risk adversity of the total pension fund. In many instances the number of employees contributing to the pension funds has decreased so the overall pension contribution has been decreasing. This has been critically acute in the case of some police pensions.

 

An estimated $3.4 trillion deficit in US public pension funding leaves both private and institutional municipal bond investors exposed to portfolio loss from credit rating declines and, in some extreme cases, possible credit defaults. What if there was a cost-effective way to leverage professional research to protect your investment?