Municipal bonds offer many challenges for risk managers. The market has thousands of issuers each with multiple bonds outstanding. Each bond has a basket of risks that are difficult if not impossible to quantify individually. In designing any risk management system, it is vital to understand how the market works first, then put together a system that portrays an accurate methodology to measure and track risk. We offer solutions to quantify those risks in a more streamlined approach.
Credit Risk Management
Municipal credit risk is ever present and highlighted regularly in the press. The fundamentals of municipal research have not changed over time, the analytic paradigm is to identify the risks and quantify them. A large heterogenous market presents many challenges with managing the credit risk. We can help you put together systems to take data available and turn it into useable information for credit research.
Interest Rate Risk Management Municipal interest rate risk is challenging for even the most experienced manager. Many of the tools used in the taxable market have been used to analyze, predict and quantify interest rate risk, these practices have had mixed results. In developing any tools or analytics it is useful to understand explicitly the assumptions being made with respect to how the municipal yield curve changes and optionality. In making decisions about modeling risk as well as how to manage it, there is no single best solution. We can help you with the tools you have or help you construct new tools that will meet your needs.