Weekly Market Update


Thursday, March 9, 2017

This past Monday, sections of the draft of the American Health Care Act, which would replace the Affordable Care Act, were released. The bill is expected to be included in the annual budget and can be approved with a majority vote in the Senate. Notably, the draft AHCA bill uses tax credits in lieu of direct subsidies that ACA currently utilizes. The AHCA proposal removes the ACA's requirement that individuals purchase insurance and the associated tax penalty if they don't. The bill would repeal taxes implemented under the ACA but would preserve parts of the ACA that have been praised, including: coverage of people with pre-existing conditions and allowing children to remain on their parents' insurance plan until age 26. At least four GOP senators have stated that they will not vote in favor of a bill that doesn't keep the Medicaid expansion provision in the ACA. Under the ACA, 31 states elected to expand Medicaid coverage and it remains unseen how that will be affected.

In Other News

  • According to Bloomberg, next week's negotiated municipal supply is expected to be approximately $3.0 billion, of which, approximately $115.2 million is attributable to higher education borrowers.
  • Per Bloomberg's World Interest Rate Probability, as of March 9th, there is a 100% chance of an interest rate hike at the March FOMC meeting.
  • This past week, President Trump released a new executive order that places a 90-day travel ban on citizens from six countries holding new visas. The executive order will only affect a small portion of international students studying in the U.S. but has created confusion at U.S. institutions of higher education, due mostly to the perceptions associated with the executive order.
  • On Monday, the University of California proposed a 20% limit on nonresident undergraduate students. The proposal comes as a response to lawmakers threatening to withhold $18.5 million of government funds if an enrollment cap was not put into place, as well as the difficulties expressed by California residents regarding available spots at any University of California campus.
  • A potential cut in federal funding to the National Oceanic and Atmospheric Administration (NOAA) could eliminate the Sea Grant program. Sea Grant, whose mission is "to enhance the practical use and conservation of coastal, marine and Great Lakes resources in order to create a sustainable economy and environment," consists of 33 programs and has driven growth in coastal regions.
  • Last week, the National Council of Nonprofits disseminated a letter for state legislators signatures in protest of the repeal of the Johnson Amendment. The Johnson Amendment prevents 501(c)(3) organizations from endorsing or opposing political candidates. While the Johnson Amendment currently remains intact, the current administration has indicated that they may attempt to repeal it.
  • When Dowling College closed in 2016, it left behind a $2 million endowment, which is now embroiled in bankruptcy law. The bankruptcy process will ultimately determine whether or not endowment dollars can be used to satisfy creditors.
  • The Municipal Securities Rulemaking Board is soliciting comments on draft amendments to Rule G-34, which regulates CUSIP numbers. The amendments aim to provide clarification regarding how Rule G-34 is applied to private placements going forward.

Rating Agency Update

  • Moody's assigned Aa3 to Vassar College's Series 2017 bonds. The outlook is stable.
  • Moody's and S&P assigned A2 and A, respectively, to Providence College's Series 2017 bonds. Both outlooks are stable.
  • Moody's assigned both an underlying and enhanced rating of Aa3 to Kentucky Community & Technical College System's upcoming transaction. The outlook on both ratings is stable.