Tuesday, March 29, 2011

Libya – Obama made an address Mon night (7:30pmET) and updated the nation on the Libyan
operations. Obama also reiterated the reasons why military forces were deployed in the nation. On the
whole there wasn’t too much new news broken in the address. Obama emphasized that the US role
would be limited, w/power being handed over to NATO and coalition partners on Wed. NYT
Saudi Arabia plans major oil rig boost - According to Reuters, the country has unexpectedly
called on top oil field service firms to quickly boost its rig count by 30% to expand production. Armaco
met w/firms like HAL & SLB over the weekend to unveil ambitious plans to raise its rig count (this was
first out in a Simmons & Co research report) – Reuters
Bin Laden - there are reports he has started to move again in Pakistan and Afghanistan, aiming
to become involved in the uprising spreading throughout the Middle East. The reports of bin Laden's
treks across the Hindu Kush regions of Pakistan and Afghanistan in recent weeks came from intelligence
sources in those countries and Saudi Arabia. – UPI
The muni market has fallen into a “deep freeze” according to the FT; sales in Q1 will wind up
being only ~$44B, down 50% from the comparable ’10 period. Infrastructure projects across the country
are being threatened by the lack of new funding. – FT

YTD Muni Issuance

$100,000
$90,000
$80,000
$70,000
$60,000
$50,000
$40,000
$30,000
$20,000
$10,000
$0
2007 2008 2009 2010 2011

Debt ceiling - The Treasury Department this week is likely to issue an updated report on when it
expects the ceiling on the federal debt will have to be increased; its most recent estimate was that the
borrowing limit would be reached between April 15 and the end of May – WSJ
Mortgage risk retention to be discussed today. American Banker late on Tues posted a copy of
the risk retention proposal. – ABA – 1) 20% down payment for purchases, and borrowers cannot have
any 60-day delinquencies on any debt within the last 24 mos; 2) max LTV of 80% for a purchase (75% for
refinancing, 70% for cash-out refis), and LTV ratio must be calculated WITHOUT mortgage insurance; 3)
debt-to-income ratio of 28%, and total debt can't exceed 36% of income; 4) risk retention DOES NOT
apply to GSEs while under conservatorship; 5) securitization sponsors can retain 5% of risk in several
forms including a 5% vertical slice of all tranches or a 5% horizontal/ first-loss position in a subordinate
tranche.