Municipal Bond Forum
Caution on Tobacco Bonds
Q
You had an article awhile ago on tobacco bonds (“Better News Ahead for Tobacco Bonds?”) and I was wondering how they are doing. I am 76 years old and interested in income.
A
James A. Klotz responds:
In our report, we discussed a new tobacco system that could ultimately boost the fortunes of the companies that back tobacco bonds.
While it’s too early to comment on the market effects of this product, we would advise caution.
Most tobacco bonds are rated below investment grade and considered to be speculative. At 76 years old, we suggest risk aversion should be your first priority.
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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.