If little else the numbers are staggering – two million data points.
But that’s the outcome when you set out to the build the first of its kind within the U.S., a ranking system according to social and economic factors its the three,141 counties for the reason that country.
In all, the rankings, compiled in Canada, derive from 36 data inputs. There’s info on demographics; environment (including data on global warming and declarations of disaster); home ownership; real estate taxes; social indicators (including education and crime levels) and personal infrastructure (for example levels of police and teaching.) That information originated from more than a dozen different government or government-related sources.
Known officially as The American County Review (ACRe), the job represents a lot more than eight months of toil by John McLean, who within the last 23 years had focused his attention on bond analytics, bond pricing and developing bond indexes, initially at Scotia Capital and many recently using the Toronto Stock Exchange.
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“There are 36 different measurements used for each county. We roll those up on an equal weight basis, and that is the way you obtain the top ranking inside the state and [then] in the nation,” said McLean who developed the product to help individuals and institutions make important living and investment decisions.
McLean, that has filed a patent on his work, called the past eight months a “labour of love.” He said he developed a pursuit a few years back when he became conscious of the information gaps that existed in the U.S. municipal bond market. The muni-market is big C almost US$4 trillion outstanding C with many issues being done on the tax-exempt basis.
“It seemed that ratings on municipal bonds were often assigned but never reviewed or updated,” said McLean, who then attempted to create a unique and non-arbitrary risk assessment of issuers in the county level. (Apart from county government issuers, school boards, redevelopment agencies, school districts, and publicly owned airports and seaports also issue.)
News that the rating agencies “may not be along with their game, and could not be doing their finest,” surprised McLean. “I always thought there was a better way, an easier way and a more frequent method to measure than [that done by the] rating agencies that is summary.”
In other words, he’d target the U.S. municipal market by developing a better model, by giving better services but get it done in a manner that is transparent and open.
“By looking at all the different economic and social factors, that aren’t interpretative, you receive a good picture of what’s going on,” he explained. Such information might be employed for both of these individuals and corporations to make decisions.
“It works for both,” said McLean. “It’s not only a case of attracting attention in investment since you are ranked high. You are trying to get more information in to the hands of people who make those decisions.”
So who’s going to purchase McLean’s product? The information providers – Thomson Reuters and Bloomberg – are a possibility much like commercial real estate investors; muni-bond issuers, investors and ratings agencies. Another possibility is by using the information to develop so-called Smart Beta bond indexes. Meantime users can obtain a free take a look at some data on the website www.acredata.com.
So do you know the three top ranked counties with above 100,000 populations? Hamilton (Ind.); Sumter (Fla.) and Weld (Col.).
bcritchley@nationalpost.com
