Municipal Bond Forum
Many Ambac-insured bonds are investment-grade quality
Q
It’s my understanding that any bond that was insured by Ambac without a rating is considered speculative, especially for possible resale, with little or no market. Is that correct?
A
James A. Klotz responds:
This is not necessarily the case. As we have said, many Ambac insured bonds are of investment grade quality but are nonrated because the issuer never applied for a rating.
On FMSbonds’ offerings, all nonrated securities carry the speculative legend automatically. Each bond, however, needs to be analyzed individually.
Our chief analyst, Dr. Jay Abrams, elaborates on this topic in his recent article titled “The Muni Market: Where We Really Are Now.”
Although brokers may currently be a bit gun shy, eventually these bonds will trade based on their underlying quality.
Ambac, for the most part, insured municipal bonds with investment grade characteristics.
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The responses provided in this forum are meant to address specific questions posed by investors about their municipal bonds and to provide market insight for our general audience. Please note, your investments, objectives, results and experience may differ significantly. Our answers and any potential strategies discussed should not be construed as a solicitation to buy nor sell any security or investment product. All investing entails risk.