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Bond Investors Fear These Words: Call Me Maybe?

August 1, 2016
Wall Street Journal

Some callable bonds include provisions that let issuers "call" them before maturity, which has been happening more often recently. Performance Trust's Andrew Pace comments on this trend and calculates the impact for investors.

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Chicago's bid for 2016 Olympics leaves pricey legacy 7 years later

July 15, 2016
Chicago Tribune

The Chicago Tribune reviews the possibilities if the City of Chicago was to host the 2016 Summer Olympics, as they had hoped. The article reviews some of the “what-ifs” regarding an Olympic Village and temporary structures within the city. Brian Battle of Performance Trust comments on the method in which the city is paying off some of its Olympics-related loans today.

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Mounting Debt Weighs Down Chicago Balance Sheet

July 12, 2016
Bond Buyer

The long-term principal and interest payment schedule for Chicago's general obligation debt swelled by about $1.7 billion last year as Mayor Rahm Emanuel and his finance team scrambled to fix a downgrade-driven liquidity quagmire that threatened the city's balance sheet. "The good news is we're taking action, that's a positive and a change in Chicago," said Brian Battle, director of trading at Performance Trust Capital Partners. The bad news, he said, is that the city is captive to the state's budget struggles and political gridlock. The city needs state approval for further pension funding changes and could lose out on its share of income tax revenue and other funds as part of a state budget solution, he added.

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Economic growth worries, oil slump drag Wall St. lower

July 5, 2016
Reuters

Stocks fell on Wall Street Tuesday following their best weekly performance of the year as investors faced continued uncertainty in the wake of Britain's decision to leave the European Union and as tumbling oil prices weighed on energy shares."Brexit is a friction on economic activity and that's bad for banks," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago."Low interest rates are horrible for financials, specifically for banks. The spread between where they borrow and where they lend is getting closer together."

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Illinois Reaps Benefit of Market Timing

June 16, 2016
Bond Buyer

Illinois paid a steeper penalty to borrow Thursday after a fresh round of downgrades but a municipal market offering historically low yields helped disguise the spreads. "People showed up to buy," and the bonds sold at relatively expected levels, said Brian Battle, director of trading at Performance Trust Capital Partners. "That is a good sign in the confidence investors have in Illinois' ability to pay."

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Chicago MWRD Pays Limited Penalty

June 8, 2016
Bond Buyer

CHICAGO – The Metropolitan Water Reclamation District of Greater Chicago sold $427 million high grade paper at what a local bond trader calls a "fair" market penalty given the tarnished names of Chicago and Illinois. The district paid a penalty but it was not too steep given that most Illinois credits, even top ones, pay one for their location in a fiscally troubled state without a budget. The water district is further dinged for the Chicago name, said Brian Battle, director of trading at Performance Trust Capital Partners.

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Bond bubble bursting? Don't hold your breath

June 6, 2016
CNN Money

Bond yields have continued to remain low even though the Federal Reserve has already raised interest rates once (back in December) and has strongly suggested that more rate hikes could be coming before the end of the year. Brian Battle, director of trading with Performance Trust Capital Partners in Chicago, said the upcoming vote by the United Kingdom about whether or not to stay in the European Union -- aka the Brexit vote -- may also keep the Fed on the sidelines.

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Hanging in the Balance

April 5, 2016
FMS Financial Managers Update

In the March 22 issue of FMS Update, we surveyed a group of six experts to share what they saw as the biggest concerns facing community institution balance sheets and to offer a few ideas for boosting net interest margin. Here, that same roundtable of experts...weighs in on possibilities for the investment portfolio and the current environment for loan and deposit pricing.

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Hanging in the Balance

March 22, 2016
FMS Financial Managers Update

The Federal Reserve may have finally gotten the ball rolling late last year with its first interest rate increase in years, but anyone anticipating a clearer, more predictable path going forward was likely nevertheless disappointed.

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Chicago Schools Lose Ground in State Capitol

March 4, 2016
Bond Buyer

Bondholders banking on the Chicago Public Schools’ ability to stabilize its rocky finances lost ground this week as the district’s labor woes intensified and lawmakers advanced an attack on its governance structure. “The news for bondholders is negative as it affirms the dysfunction at the state and local level,” said Brian Battle, director of trading at Performance Trust Capital Partners. The district has more than $6 billion of outstanding debt.

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Wall St. mixed as investors eye future rate hikes

February 24, 2016
Reuters

Wall Street was mixed on Friday as concerns about the timing of future interest rate hikes offset gains in materials and energy stocks. "I think we're near the top of the roller coaster again. All of the things that made the market go wild in January are still up in the air," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.

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Wall Street ends lower in feeble end to strong week

February 26, 2016
Reuters

Wall Street ended lower on Friday after a week of strong gains. Investor concerns about the timing of future interest rate hikes offset some gains within the market. Brian Battle of Performance Trust discusses the market’s activity and the potential for further shifts.

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CPS puts off $875 million bond sale

January 27, 2016
Chicago Sun-Times

The Chicago Public Schools on Wednesday abruptly put off $875 million in borrowing needed to ease its financial crunch amid signs it would pay a heavy price — in the form of record-high interest rates — to attract investors. Brian Battle, director of trading for Performance Trust Capital Partners, a Chicago firm that analyzes bonds for investors, said temporarily halting the deal is something that happens occasionally but should have been avoided. “It’s embarrassing to go to market and have to pull the deal,” he said. “Either there were no buyers or there were no buyers at a price that the city was going to take. Either way, it’s a bad sign for CPS.” How bad it is, Battle said, depends on whether the school district’s underwriters can find buyers quickly.

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Takeover, Bankruptcy Talk Hammers Chicago School Spreads

January 22, 2016
The Bond Buyer

CHICAGO – Bruce Rauner hasn't been able to broker a state budget, but the Illinois governor was able to move the market for Chicago school bonds – in a costly direction for the school district. "If you are interested in this deal you probably know they are insolvent but it doesn't help the prospects for the Chicago Board of Education to have the governor of the state saying your school district needs to be taken over and restructured right in front of your deal," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago. "It gives investors an excuse to demand more yield."

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Uncertain Panorama

January 15, 2016
Negocios

Expert from Performance Trust believes that legislators in the United States will not act until a non-payment occurs.That is the belief of Brian Battle, Director of Performance Trust, who yesterday held that the lack of a clear mechanism to resolve the debt crisis of the Island makes it very difficult to estimate how much bondholders will recover in the case that the Puerto Rican Government lacks money to pay them. Performance Trust offers advisory and asset management to institutional clients in Puerto Rico such as banks and insurers.

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Incierto el panorama

January 15, 2016
Negocios

Experto de Performance Trust cree que los legisladores estadounidenses no actuarán hasta que se produzca un impago.

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Chicago, CPS, Illinois All Testing Their Credit in Primary Market

January 11, 2016
The Bond Buyer

The lack of supply to meet demand – especially for yield – will benefit Chicago, Chicago Public Schools, and Illinois when all three fiscally distressed credits land in the bond market this month, market participants say. "It's a great time to be a distressed borrower," with supply falling short of investor demand, said Chicago-based Brian Battle, director of trading at Performance Trust Capital Partners.

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Analyzing the Impact of the Stock Market’s Volatility on Investments

January 7, 2016
WTTW

The stock market took a tumble Thursday as China’s stock market dropped 7 percent overnight and crude oil prices dropped to their lowest level in more than a decade. But what does that mean for investment portfolios?

“They are in a unique situation where they’re a Communist government, but trying to have a capitalist economy. So it’s a unique mix of central planning and free market,” Battle said. “Their stock market is only 25 years old, so they’re still learning their way around it. Up until cancelling it today, they had what they called a circuit breaker system, which is their regulatory control to curb volatility in the stock market. Circuit breakers are supposed to be a market stabilizer, but closing down the stock market is having the opposite effect. … It’s alarming investors around the world.”

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Another Credit Blow Adds to Chicago Schools' Woes

December 22, 2015
The Bond Buyer

The Chicago Public Schools' cash crisis triggered a fresh rating blow this week that market participants say could scare off some buyers and further drive up its already steep spread premiums. A B1 rating "severely restricts the public buyer base," said Brian Battle, director of trading at Chicago-based Performance Trust Capital Partners. He suggested a private placement might work better for the district. The bond resolution the Board of Education approved last week allows for either a public offering or private placement.

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Is the junk bond crisis the start of another 2008?

December 15, 2015
CNN Money

A major junk bond mutual fund shut down last week. And that has many investors wondering if the risky high yield debt market could be about to collapse ... and drag the stock market down with it like subprime mortgages did in 2008. Brian Battle, director of trading at Performance Trust Capital Partners, thinks more junk bond funds are in danger of going under -- especially ones with exposure to risky short-term bank loans and energy company debt.

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World Week Ahead: Finally, it's Fed week

December 14, 2015
The National Business Review

The US Federal Reserve's two-day meeting and a widely-anticipated interest rate increase will form the key driver in the coming days as investors eye clues about the projected pace of future hikes. "If...(policymakers) came out saying that over the next two years they will raise by 'this' much, that would be very destabilizing," Brian Battle, director of trading at Performance Trust Capital Partners in Chicago, told Reuters. "The market will take great relief in the Fed communicating it will be very patient for the next increase."

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The Fed's rate hike could cause chaos in markets - and investors may not be ready

December 12, 2015
Business Insider

Stock market investors are ready for the first U.S. Federal Reserve interest rate hike in nearly a decade next week, but they may not be fully prepared for all of the nuanced remarks likely to accompany that announcement. "If...(policymakers) came out saying that over the next two years they will raise by 'this' much, that would be very destabilizing," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.

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Let's Face Facts: CPS is Insolvent. What Should Happen Next

December 2, 2015
Crain's Chicago Business

Chicago Public Schools, the third-largest school system in the United States, is facing what has been described as a budget disaster. However, the word “disaster” is a misnomer. An avalanche is a disaster. A volcano is a disaster. The natural world produces disasters as sudden events with unexpected outcomes.

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Wall St ends flat; Disney, retailers dip on sales worries

November 27, 2015
Reuters

U.S. stock indexes ended little changed in light trading on Friday, with consumer stocks falling as investors fretted over early reports on the U.S. holiday shopping season and Disney's subscriber losses weighed on the market. "We're going to get today over with and hit the ground running next week," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.

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Market Doesn't Like Chicago's Odds in Pension Case

November 19, 2015
The Bond Buyer

The municipal market's buyside, as do legal experts, sees Chicago's pension reform appeal to the Illinois Supreme Court as a longshot and wants the city to come up with an alternative. "First, it's a higher burden because the lower court ruled against the city and so they would have to overturn. Second, it's an argument the court has heard before in the state case although with a different nuance," said Brian Battle, director of trading in Chicago at Performance Trust Capital Partners.

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Is a Rate Hike a Done Deal After the Fed Minutes?

November 19, 2015
WSJ.com

Brian Battle is featured on What’s News where he discusses the latest minutes released from the Federal Reserve. The Federal Reserve has finally expressed interest in raising rates, which is expected to come in December. However, the Fed is data dependent and this is not a guarantee going forward, a lack of a raise in rates would signal that the economy is still in a fragile state. Rates are forecasted to be increased by a minimal amount. Brian believes that the big question going forward is what happens after rates have been initially raised. He concludes by reviewing how the upcoming retail season will have an effect on this going forward.

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Paris attacks seen causing short-term global markets drop

November 15, 2015
Reuters

Stocks in major markets are set for a short-term sell-off on Monday after suspected Islamist militants launched coordinated attacks across Paris that killed more than 130 people, but few strategists expect a prolonged economic impact or change in prevailing market directions. If increased national security causes trade friction, longer-term commercial effects also "bode ill for the euro," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.

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Chicago City Council Passes Budget With Big Tax Hikes

October 28, 2015
The Bond Buyer

Chicago's city council Wednesday easily approved a record property tax hike as part of Mayor Rahm Emanuel's $7.8 billion 2016 budget. "The mayor has demonstrated leadership and political will by raising the property tax. The mayor is taking action to solve the city's problems but the city is still beholden to the state and so his hands are tied," said Brian Battle, director of trading at Performance Trust Capital Partners. "Now we are waiting to see the same leadership in Springfield where there is a real vacuum."

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Chicago's Enterprise Paper Fares Better With Buyside

October 15, 2015
The Bond Buyer

Investors squeezed a more modest penalty out of Chicago on a recent $419 million wastewater revenue bond deal than they have demanded on its general obligation paper, market participants said. The wastewater deal was Chicago’s second in two weeks in which it offered revenue-backed bonds that fared dramatically better than its GOs. “The market is differentiating the city from its enterprise systems and there is high confidence that the enterprise systems will pay,” said Brian Battle, director of trading at Performance Trust Capital Partners. “Professionals understand the differences.”

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Houston's Allegiance Bank goes public, sees initial stock gain

October 9, 2015
Houston Chronicle

Houston-based Allegiance Bancshares launched its initial public offering Thursday at $21 a share and ended the day with a significant gain.

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Acquisitive banks say it's paramount to keep regulators up to speed

October 8, 2015
SNL

Highly acquisitive banking companies say consistent success on the M&A front is dependent on well-established lines of communication with regulators and is often boosted by advanced understanding of potential targets and their markets, proven due diligence practices and immediate efforts to mesh acquired employees into the buyer's culture. Daniel Bass, managing director of investment banking at Performance Trust Capital Partners, said that it is also important for sellers to be keenly aware of regulatory matters affecting M&A.

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Capital One Bank to cut jobs at Louisiana branches

September 10, 2015
The New Orleans Advocate

Capital One Bank is cutting jobs at branches throughout the state, the latest in years of moves by the banking industry to adjust to the growing number of online transactions. The moves mark the latest downsizing to hit the banking industry following years of adjustments as a new generation of customers has embraced online banking, said Jonathan Briggs, a New Orleans bank mergers specialist at Performance Trust Capital Partners.

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Striking a Balance

September 1, 2015
FMS Financial Managers Update

Despite a steady drumbeat of negative news, Bart Smith actually thinks community institutions are in a pretty good position right now to take advantage of more promising economic and interest rate conditions on the horizon.

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While you were sleeping: Relief on China rate cut

August 26, 2015
National Business Review

Wall Street rose, rebounding from Monday's sell-off, as investors reassessed valuations after China's central bank cut rates yet again in an effort to contain the country's economic slowdown. "We had a panic yesterday," Chicago’s Performance Trust Capital Partners director of trading Brian Battle told Reuters. "As people get back in the market, they're questioning what everything is worth."

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Wall Street's sharp rally loses its edge

August 25, 2015
Philly Voice

Wall Street rallied on Tuesday as investors bought beaten-down stocks a day after fears about China's economy sent the market into its worst slump in four years. Investors drove prices sharply higher from the opening bell but caution set in by the afternoon due to lingering concerns that a slowdown in China could hobble global growth, even after the country's central bank cut interest rates on Tuesday for the second time in two months. "We had a panic yesterday. As people get back in the market, they're questioning what everything is worth, said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago.

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Allegiance Bancshares makes plans to go public

August 25, 2015
Houston Chronicle

Despite this week's stock market turbulence and the fall of oil prices below $40, Houston-based Allegiance Bancshares is launching an initial public offering.

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Chicago Ties Expected to Cost Park District in Deal

August 25, 2015
The Bond Buyer

The Chicago Park District heads to market Thursday with $88 million of double-A rated debt that market participants say should offer up some alluring yield premiums due to the troubled Chicago name. The district's highest rating of AA-plus comes from Standard & Poor's with Kroll Bond Rating Agency putting the district at AA and Fitch Ratings assigning its AA-minus rating. All three affirmed the ratings and their stable outlook. The deal should price cheaper "because of the radioactivity of Chicago and its name," said Brian Battle, director of trading at Performance Trust Capital Partners.

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Houston banks Prosperity, Tradition agree to merge

August 6, 2015
Houston Chronicle

After an acquisition hiatus, Prosperity Bancshares jumped back in the ring Thursday by announcing plans to acquire Tradition Bancshares.

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Chicago Faces Yield Penalty in Clean-Up Deal

July 14, 2015
The Bond Buyer

Chicago shouldn't expect much of a break for resolving its credit deterioration-driven liquidity crisis when it sells $1.1 billion of tax-exempt and taxable bonds this week, as investors await a resolution on more daunting pension funding and budgetary ills. "As a buyer can it get any worse? This might be as cheap as it gets," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago, of the negative headlines over the city's pension woes, its fall to junk, a looming court decision on pension reforms, and questions over Chicago Public Schools' solvency. "Everyone knows they have to get the deal done. They are going to be price takers."

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Wall St tumbles as investors flee equities on Greek debt crisis

June 29, 2015
Reuters

U.S. stocks fell sharply in heavy trading on Monday and the S&P 500 and the Dow had their worst day since October after a collapse in Greek bailout talks intensified fears that the country could be the first to exit the euro zone. "There is no mechanism to be ejected from the European Union. This has never happened before," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago. "When you don't know what could happen you sell. You get on the sidelines."

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Analyst: CPS Has ‘No Choice’ But To Borrow $1B Amid Cash Crunch

June 25, 2015
CBS Chicago

A top financial analyst said bond rating agencies probably won’t be troubled by the Chicago Board of Education’s vote to borrow more than $1 billion to help the Chicago Public Schools address a massive budget crunch in the coming year. It might not sound like a good idea for CPS to borrow $1 billion more when it’s already heavily in debt, but Performance Trust Capital Partners director Brian Battle said CPS has no real options.

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U.S. Bancorp surprises market with bond 'cleanup calls'

June 25, 2015
Minneapolis/St. Paul Business Journal

U.S. Bancorp has made millions in on-paper profits in recent years through a bond-market loophole that lets the bank buy high-performing mortgage bonds at below-market prices. The tactic is legal and profitable. Performance Trust Capital Partners estimates that U.S. Bancorp has cleared $53 million in on-paper profits over three years — but it's still controversial.

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U.S. Bancorp's Bond Coup Comes at a Cost

June 23, 2015
Wall Street Journal

U.S. Bancorp is racking up profits with a bond-market maneuver that is pinching some investors holding high-yielding investments. The Minneapolis company, which operates the fifth-largest U.S. commercial bank by assets, has made paper profits of about $53 million over the past three years forcing insurance companies, community banks and other investors to sell it Ginnie Mae-insured mortgage bonds at below-market prices, according to calculations by Performance Trust Capital Partners, LLC, a Chicago fixed-income investment firm.

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Chicago Sales Tax Paper Goes Down Better than Its GOs

June 3, 2015
The Bond Buyer

Helped by a stronger revenue backing, Chicago's remarketing of $112 million of sales tax-backed bonds fared notably better Wednesday than its general obligation deal a week earlier. "The pricing looks pretty fair," said Brian Battle, director of trading at Performance Trust at Capital Partners. "Because of the triple-A it's getting better pricing than the GOs, but it's ridiculously cheap for a triple-A. It demonstrates the market penalty" for the city amid state political inaction on pension liabilities.

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Chicago pulls off $674 million refinancing, but at a heavy price tied to junk status

May 27, 2015
Chicago Sun-Times

Cash-strapped Chicago eased its immediate financial crisis Wednesday by converting $674 million of variable rate debt to fixed interest rates, but paid a heavy price tied to its junk bond rating. Market analyst Brian Battle agreed that Chicago had no choice but to refinance. He argued that investors appeared to be driven largely by the discount that the bonds were sold at, meaning the long-term costs to the city could be considerable.

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Chicago's Position Bolstered by Deal Overhaul

May 22, 2015
Bond Buyer

Chicago's revamp of its $800 million floating-to-fixed debt restructuring helps its position as it heads into the market this week with battered credit ratings, say several buyside participants. "It was a good tactical decision to delay. It's very difficult coming into the market the week after those kind of downgrades," said Brian Battle, director of trading at Performance Trust Capital Partners. "The decision to upsize was smart and to bring in more horsepower was a good idea."

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S&P ends at all-time highs but traders eye weak volume

May 21, 2015
Reuters

The S&P 500 closed at a record high on Thursday after disappointing economic data bolstered expectations that an interest rate hike is likely to come only later in the year. Traders warned that below-average volume in recent sessions suggests that not all of Wall Street may be confident in the market's gains. "It doesn't matter if we're at an all-time high if there are just two guys trading a stock back and forth," said Brian Battle, director of trading at Performance Trust Capital Partners in Chicago. "It's something to be aware of."

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THE WATCHDOGS: Generous pension benefits only one part of state, city financial crisis

May 17, 2015
Chicago Sun-Times

One of every four retired workers from the state of Illinois, the city of Chicago and the Chicago Public Schools is getting a pension of more than $60,000 a year. Are these workers to blame for the pension crisis that sparked historic downgrades last week in Chicago’s and CPS’ bond ratings — ratings that might require City Hall to pay $2.2 billion to financial institutions much earlier than planned? Not by a long shot. The downgrade from Moody’s means the reworked deals will come at a steeper price than if the city’s bond rating had remained higher, said Brian Battle, director of trading for Performance Trust Capital Partners, a Chicago firm that analyzes bonds for investors.

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CPS' financial straits cost taxpayers with sharply higher interest rates on bond sale

April 22, 2015
Chicago Sun-Times

The Chicago Public Schools — already facing a federal criminal investigation of its CEO and a projected $1.1 billion budget deficit next school year — now must pay a price for those problems through higher interest rates on a new $300 million bond deal. That came after Fitch Ratings, a Wall Street bond-rating agency, downgraded the Chicago Board of Education’s credit rating last month three notches, leaving it just one notch above junk status, and after school officials last week disclosed there is an ongoing federal investigation involving CPS chief executive officer Barbara Byrd-Bennett. Brian Battle, director of trading for Performance Trust Capital Partners, a Chicago firm that analyzes bonds for investors, said the district’s poor credit rating meant the interest rate on the deal was much higher than it would have been for a government selling bonds with a higher rating.

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Chicago School System Returns to Market Amid Headwinds

April 17, 2015
The Bond Buyer

The Chicago Public School system is facing headwinds as it returns to the bond market next week, stung by back-to-back negative headlines. The news reports include the disclosure of a federal probe into a no-bid contract to a firm with ties to the district's chief executive officer and comments from freshman Gov. Bruce Rauner that raised bankruptcy as an option for the district. Brian Battle, director of trading at Performance Trust Capital Partners, [commented that] investors might be willing to overlook the governor's comments.

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