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by Elizabeth Carvlin, Yvette Shields, and Rochelle WilliamsThe power outage that reached its tentacles into Canada, Northeast, and the Midwest last week highlighted not only electric, utilities and their infrastructure needs but also water systems that depend, on electricity and have been working to upgrade aging facilities through, bond issuance., As the electricity went out last Thursday, so did Cleveland's largest, according to local reports. Residents of both cities were under orders to boil their drinking water., Both cities have long-term plans to finance upgrades to the aging, systems through bond issuance over time, but industry experts have argued, major water systems across the country need additional help., Cleveland has been investing an average of $60 million per year over, according to, testimony from Beverly Ingram in front of a subcommittee of the House, Over the next eight years, To finance the upgrades, Cleveland since 2001 has raised rates 18%, annually and will do so to *2006-, said Ingram, the assistant director of the, Detroit Water and Sewer Department., Aside from upgrades, the interdependence of many systems has some, market experts concerned., This really focuses attention on the quality of our infrastructure and, whether we have the appropriate backup systems in place to run critical, said Richard Ciccarone, president of Merritt Research Services, which tracks various municipal sectors such as public power and municipal, infrastructure., Ciccarone said he expects that governments that do not now operate, critical systems independent of each other -- whether they were impacted by, last week's blackout or not -- will seriously look at taking steps to, separate them. That could result in increased borrowing to finance such projects., Besieged California Gov. Gray Davis, who faces a recall election on Oct. 7, knows about energy woes. California endured rolling blackouts and skyrocketing power costs during the energy crisis of 2000 and 2001. As a result, with electricity users footing the bill for debt service., The state has since added 6, 000 megawatts of new power during the past, we are not vulnerable if one major power plant, Davis said., Also, 38 power plants received operating licenses since *1999-, according, to the governor's office. The Davis administration contends manipulation in the power market by Enron and other energy firms made the situation worse., President Bush on Friday echoed the comments of many municipal leaders, call to modernize the nation's, electrical system. The municipal market could see additional bond issuance by public utilities whose infrastructure will also come under scrutiny., The assets of public utilities last year had an average age of 13.3, years, Ciccarone said. That was up from 11.5 years a decade earlier, although Ciccarone had no figures for investor-owned companies., Projects have been deferred for the sake of the bottom line with, companies having to produce certain financial margins for investors, said., Municipal leaders play a key role in pressuring investor-owned, utilities to keep their equipment upgraded, We depend on electricity as the lifeblood of our economy, and we have, to look at it and say, `Is it time to upgrade it?' We are far too vulnerable, Politically
Published in Bond Buyer (2003)
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by Elizabeth Carvlin, Yvette Shields, and Mary WisniewskiMunicipal professionals on the trading and underwriting desks of, many Chicago-based firms resumed limited operations Thursday with the, noticeable absence of a daily phone conversation with brokers from, Cantor Fitzgerald Fixed Income Brokers., A handful of Cantor brokers covered many of the Chicago-based, trading desks. They included Glenn Thompson, Andy Stern, Karl Smith, and Dennis Buckley., Representatives of the trading desks from a handful of firms like, Salomon Smith Barney Inc., Loop Capital Markets Inc., Banc One Capital, Markets Inc., and Hutchinson, Shockey, Erley & Co. said they were still, holding out some hope that the brokers they held professional and in, many cases personal friendships would be found alive., But they acknowledged that the likelihood that their acquaintances', survived the attack was slim since it was believed that they had been, in the firm's offices on the upper floors of the North Tower when the, terrorists struck. Many Chicago-based traders were still stunned., Market players who worked with Stern said he is in his late 30s or, early 40s and married with several young children., Thompson, who is in his 40s, had just married this past April and, lives with his wife in midtown Manhattan., Smith is a resident of New Jersey and is married with several, children., Buckley is in his mid-30s and lives in New Jersey with his wife and, children., Hawkins recalled Labor Day weekend last year when Buckley traveled, to Chicago and the pair made the trek up to Green Bay to attend a, Hawkins said., Thompson's name has surfaced on a list of survivors but Chicago-, area traders said they had received no word that he was among the, survivors. Fox said he and his wife often vacationed with Fox and described his as avid outdoorsman and frequent traveler., He's probably one of the happiest-go-lucky person I know. He's affable and kind everybody who ever met him loved him, Fox said., Thompson loves to ski and would annually travel to Vail, Colo., skiing trips, some with Chicago traders that were among his friends., While municipal firms awaited word about the status of their, colleagues, they also resumed some operations., Members of Banc One's municipal trading desk said the firm was, ready to trade but was seeing little demand and only a handful of bonds, being offered in the secondary market. Many market sources said there was still a lot of confusion on many issues such as the procedures for clearing trades., The markets could handle more trading, but out of respect and a, sense of uneasiness, municipal desks spent much of their time Thursday, reassuring customers and transacting only essential business., At Ameritas Investment Corp. in Omaha, Michael Shoemaker, vice, president of trading said Thursday was spent fielding calls from sales, representatives and clients with questions. The company has been trading only its current inventory of municipal securities, We do have brokers that are working off of our inventory, said., Shoemaker said that the firm's fixed-income desk remained fully, staffed to make sure that anyone who needed help could reach them. The company conducted no secondary municipal trading and had not had any taxable issue trades or new issues., Really, our activity has been limited to phone calls, answering, adding that most have not been in a mood to sell., At Raymond James & Associates Inc. in Michigan, William D., Vanderweele, and put its inventory back up on the screen, but otherwise were slow Thursday., We've done a couple street orders, but basically, people don't, Shoemaker said his firm was preparing to gear up for business on, Friday, but didn't expect business to get fully moving until next week., He said that while members of his firm have a general overall, he added that the enthusiasm, for jumping back into trading has been low., I think anybody in this business, for those of us that work in, Shoemaker said., This tragedy hits the heart of their business and emotions., We have friends there and people you do business with for 15 years, The restraint in trading may be partly out of uneasiness and, respect. As a salesman, Shoemaker said, making outgoing calls feels uncomfortable., You feel funny, trying to call a customer up and trying to make, Some business was taking place out of necessity people know they, must return to work but few outgoing calls were made this week., I do think that to an extent, trading is probably not occurring at, anywhere close to normal levels partly out of respect for what, Shoemaker said., I think anybody in this business, for those of us that work in, David Johnson of Merrill Lynch & Co.'s Chicago office, said that, the company's institutional sales and underwriting capabilities are up, and he expects banking to follow. The firm is currently trying to figure out its positions, Johnson said., Short term re-marketing bonds are a bit of a challenge right now, said Johnson, who is the Chicago coordinator for the firm's municipal, effort. The firm's main New York office has had to relocate temporarily in New Jersey., Cain Brothers & Co. in New York was evacuated and closed Tuesday, but the office had returned to work by Thursday., Mike Fitzsimons, principal at the firm, said that the building had, been evacuated from the 10th floor up. They were on the 25th floor, they worked with a reduced staff and Thursday returned to full staff., Operationally, we are fine. We have not been directly impacted by the events thus far, Fitzsimons said., The New York offices of Tucker, Anthony Inc., across the street from World Trade Center in New, York, were closed, one source said. Windows inside the building were shattered, the source said. A representative from the company, which is currently in merger talks with Dain Rauscher, was not available by press time. The sourcesaid all of the employees were accounted for.
Published in Bond Buyer (2001)
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