Municipal Bond Forum
Bond safety and the subprime mess
Q
How does the subprime problem affect municipal bonds? Will there be a recession? I personally would be wiped out financially if the municipal bond market failed. What are the real risks in municipal bonds?
A
James A. Klotz responds:
We don’t see the subprime problem having any adverse impact on the credit quality of municipal bonds. Typically, bond holdings appreciate in value during a recession. Slower growth leads to reduced demand for money and ultimately lower interest rates.
Municipal bonds as a class of securities are considered to be second only to Treasury bonds in regard to safety.
Start here.
Do you have specific criteria for bonds you’re looking for? Let us know and we’ll e-mail you bonds that fit your needs. There is no charge for this service.
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.