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  Monthly Municipal Market Summary
May 2009

National, GO, Par Bond,Current Call Yield Curve
  AAA Ins BBB Ins Zero
5 yr 1.99 2.40 5.34 2.70
10 yr 3.00 3.48 5.96 4.02
15 yr 3.65 4.09 6.22 4.75
20 yr 4.14 4.62 6.45 5.19
25 yr 4.47 4.92 6.56 5.43
30 yr 4.55 4.98 6.61 5.47
 
Yield Differential From Previous Month
  AAA Ins BBB
5 yr 0.11 0.10 -0.13
10 yr -0.02 -0.02 -0.29
15 yr -0.11 -0.13 -0.35
20 yr -0.13 -0.11 -0.34
25 yr -0.04 0.01 -0.30
30 yr 0.00 0.02 -0.28

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 5.43 5.18 5.05 5.01 4.98 4.96 4.90 4.87 4.87

Key Financial Indicators
    US 30 Yr Treas Yield 4.35%
    US 10 Yr Treas Yield 3.47%
    DJ Industrial Average 8500.33
    Nasdaq 1774.33
    S & P 500 919.14
 
PreRefunded Scale (Mid Year, Rerated)
2010 0.54
2011 1.02
2012 1.37
2013 1.58
2014 1.85
2015 2.16
2016 2.36
2017 2.50
2018 2.68
2019 2.96

General Market Comments: Municipal high grade bonds preformed well over the first three weeks of May. Data releases continue to paint a poor picture for the economy. The new Build America Bonds kept supply In the tax exempt sector very manageable and demand remained strong for top quality bonds. However, attitudes changed over the last week or so of May. As the treasury market retreated in the face of the future borrowing needs the attractive ratio to taxable's that munis enjoyed began to erode. Traders became less willing to carry bonds in inventory and most preferred to wait and see what happens after more cash becomes available with the reinvestment of the June first coupon. For may the yield curve flattened a bit as five year yields rose about fifteen basis points, ten year yields rose very slightly, longer intermediates yields fell nearly ten basis, and the longest yields were mostly unchanged.
High Yield Report: The high yield municipal market outperformed high grades in May 2009 and closed the month with a total return of 6.402% as measured by the Standard and Poors /Investortools, High Yield index vs. a 1.248% return on the Standard and Poors/Investertools Investment Grade Index. In the health care sector, CCRC's tightened by 50 to 70 basis points on improved bids. In the education sector, non-rated private and charter schools were up anywhere from 50 to 70 basis points on the long end with improved bids. One example of this improvement was the MD IDA {Our Lady of Good Counsel} 6.00% due in 2035 which were priced to yield an 8.44% up about 5.25 points for the month. In the land secured sector, strong California projects tightened by 20 basis points, on the long-end with some names being bid through a 7.00% while weaker names continued to trade behind a 9%. Florida land secured names, from twenty years and out traded anywhere from 7.30% to 8.00%. During the month there were approximately 35 debt service reserve fund draws and these projects were adjusted down to around 11%. Secured and unsecured airline issues closed the month up anywhere from 9 to 13 points on improved bids and size trades. In addition, prepaid gas issues for Citibank, J P Morgan, Merrill Lynch and Goldman were up on the long-end, anywhere from 6 to 10 points depending on structure. Finally, tobacco issues were up by 7 to 10 points, out long depending on structure with Michigan Tobacco (6 7/8% due in 2042) closing the month at around $81.18 up about 11 points for the month.
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