Municipal Bond Forum
NC housing bonds
Q
First, what do you charge to buy bonds? Second, we bought NC Housing Finance Agency Home Ownership Revenue Bonds 1998 Trust Agreement, rated AA2. We paid $970 per bond and purchased $100,000. The bonds are selling at $940 but have an interest of 5.20%, and we have already received $10,400 in interest in two years. The cost does not concern us. We will not sell these bonds and will pass them on to our children. I am 95 and my dear wife is 83. We have more than $300,000 in cash and want to buy more of the same, but would like your feelings about their safety, even though they are rated AA2. (Cusip 658207HH1.) Your comments will be surely appreciated.
A
James A. Klotz responds:
The North Carolina Housing Bonds that you asked about are rated in the “AA” category by both Moody’s and Standard & Poor’s. S&P indicates they believe North Carolina Housing’s single family home ownership is conservatively run. A check on the latest disclosures regarding this bond shows only 12 loans out of a total of 653 to be delinquent for either 60 or 90 days. Additionally, only four loans were in foreclosure as of June 30, 2009, the date of the report. This appears to be a strong credit that has performed very well in the current economic crisis. That said, you might want to diversify your holdings so that you’re not too exposed in the housing sector to the exclusion of other municipal bond types.
All prices on our Web site are net to the investor. There are no additional fees or costs. Naturally, as with all bond purchases, there is interest to be paid that has accrued since the last semi-annual interest payment.
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