Municipal Bond Forum
Looking for safety
Q
The city of Detroit, under the emergency management of Kevyn Orr, is attempting to treat general obligation municipal debt as unsecured. At stake and under consideration by the court are the terms “promise” versus “tax obligation.” Do you have any thoughts on the safest states?
A
James A. Klotz responds:
It is important to remember that Detroit is extremely unique. It is a city that has clearly been deteriorating for many years due to gross mismanagement with a declining population and tax base.
There are many high-quality bonds available in every state that can satisfy your requirements for safety. As a resident of a state with no income tax, you have the entire country to choose from.
Start here.
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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.