Rallying Municipal Bonds May Be Stretching Valuations, According to Standish

Tue Jan 29, 2013 6:59am EST

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BNY Mellon Bond Manager Takes More Defensive Posture
NEW YORK,  Jan. 29, 2013  /PRNewswire/ -- Standish Mellon Asset Management
Company LLC, the  Boston-based fixed income specialist for BNY Mellon, has
adopted a more defensive municipal bond strategy as rising valuations have made
it more difficult to identify compelling values among many types of bonds.

Standish  made the comments in its recently released white paper:  Municipal
Bond Valuations:Is the Market Boarding a Runaway Train?

"Municipal bond investors have emerged from the tunnel of skepticism, and there
is now some danger that we could be heading toward runaway valuations," said 
Christine Todd, president and head of tax sensitive investments for  Standish.

Progress toward resolving the European sovereign crisis in 2012 boosted investor
optimism and focused investors on the likelihood of a protracted easy money
policy, the report notes. This contributed to falling municipal bond rates,
propelling valuations of certain categories of municipals to well above their
ordinary range when compared with comparable Treasury securities, according to 
Standish.

"In this environment, we are focusing on issues that have demonstrated liquidity
throughout economic cycles and held their pricing levels during periods of
dislocation in the municipal market," Todd continued.  "We think the right
strategic move is to give up a small amount of yield now in order to retain
liquidity to take advantage of market opportunities that could arise."

Among the municipal bonds viewed favorably by  Standish  are
infrastructure-related essential purpose revenue bonds such as those linked to
water and sewer systems as they have revenue bases which are relatively immune
to economic cycles, the report said. In addition, the report noted these bonds
are legally and operationally distinct from other municipal operations and have
independent rate setting authority.  

Notes to Editors:  

Standish Mellon Asset Management Company LLC, with approximately  $104 billion 
of assets under management, provides investment management services across a
broad spectrum of fixed income asset classes. These include corporate credit
(investment-grade and high-yield), emerging markets debt (dollar-denominated and
local currency), core / core plus and opportunistic (U.S. and global)
strategies.   Standish  also offers full service capabilities in insurance
client strategies and liability driven investing. The firm also includes assets
managed by  Standish  personnel acting as dual officers of The Dreyfus
Corporation and The Bank of New York Mellon and Alcentra NY, LLC personnel
acting as dual officers of  Standish.

BNY Mellon Investment Management  is one of the world's leading investment
management organizations and one of the top U.S. wealth managers, with  $1.4
trillion  in assets under management. It encompasses BNY Mellon's affiliated
investment management firms, wealth management services and global distribution
companies. More information can be found at  www.bnymellon.com.  

BNY Mellon  is a global financial services company focused on helping clients
manage and service their financial assets, operating in 36 countries and serving
more than 100 markets. BNY Mellon is a leading provider of financial services
for institutions, corporations and high-net-worth individuals, offering superior
investment management and investment services through a worldwide client-focused
team. It has  $26.7 trillion  in assets under custody/administration and  $1.4
trillion  in assets under management, services  $11.4 trillion  in outstanding
debt and processes global payments averaging  $1.5 trillion  per day. BNY Mellon
is the corporate brand of The Bank of New York Mellon Corporation (NYSE: BK).
Additional information is available on  www.bnymellon.com  or follow us on
Twitter @BNYMellon.

All information source BNY Mellon as of  December 31, 2012. This press release
is qualified for issuance in the US only and is for information purposes only.
It does not constitute an offer or solicitation of securities or investment
services or an endorsement thereof in any jurisdiction or in any circumstance in
which such offer or solicitation is unlawful or not authorized. This press
release is issued by BNY Mellon Investment Management to members of the
financial press and media and the information contained herein should not be
construed as investment advice.  Past performance is not a guide to future
performance.  A BNY Mellon Company.

SOURCE  BNY Mellon


Mike Dunn, +1 212-922-7859, mike.g.dunn@bnymellon.com, or Patrice Kozlowski,
+1-212-922-6030, patrice.kozlowski@bnymellon.com

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