At Cumberland, we continue to take a harsh view about many California municipal bond credits. We do this notwithstanding the recent upgrade action of a prominent credit-rating agency.
At Cumberland, we do our own internal credit review work and hold to a strict internal discipline. Simply put: if we are worried about getting paid, we avoid the issuer. That is the case with regard to many California cities and other California-related credits.
We have been drafting a follow-up piece about California. Then my colleague, John Mousseau, offered this exceptionally well-written discourse that he found in the publication linked below.
We praise the author, Steve Malanga, and recommend this piece to our readers.
“The Pension Fund That Ate California,” by Steven Malanga, City Journal, Winter 2013