It's time to pop some champagne: the earliest report we've seen from Meredith Whitney on hopelessness in the municipal bond market is dated 9/28/10. While her quote on hundreds of billions of dollars of defaults in a year didn't come until December 19th, this isn't a date to go unnoticed. Muni defaults so far in 2011 have reached 70% of Whitney's prediction, if she had moved the decimal over two places.
That's right, Whitney's prediction of $100B in defaults is on track to be $99B off the mark -- so close.
Part of her prediction entailed very large credits buckling. As we noted here, there was one big name bankruptcy, but sadly the debtor was not the one that made the name big (it was Boise County which has nothing to do with the city.)
It seems fitting that the day before this anniversary Assured Guaranty - the sole guarantor issuing new policies - would be put on credit watch negative by S&P. S&P confirmed our efficient (half-assed) analysis of the new criteria maintaining Assured in the AA category (read it here.) The stock popped and the guarantor's perceived credit strength should benefit, not to mention product demand and pricing power.
All in, the muni market is benefiting from safe haven status from European sovereign credit woes a year after Whitney first started pushing wind in the market.
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