FMSbonds, Inc.’s Municipal Bond Forum is an exclusive opportunity for investors to submit questions and comments on the bond market or to respond to one of our articles.
To participate, just send us an e-mail. Be sure to include your name or initials and your state of residence. Posted e-mails may be edited for length and clarity. If you prefer a private response, please note that in your e-mail. Responses are provided by James A. Klotz, president and co-founder of FMSbonds, Inc., a municipal bond specialist for more than 35 years, and other members of the firm as noted.
Postings are listed by date. If you have any questions, please call us at 1-800-367-2663 or e-mail us.
Excellent article (“Investors in Michigan Munis Strike Back“), clarifying the unintended consequences of the Detroit approach to bankruptcy. In addition to the obvious chilling effect this is having on the municipal bond market in Michigan, I reckon it is also having a negative impact on the broader muni bond market. If the current plan goes through, it is a game changer for muni bonds everywhere.
M.H.
Do you think, theoretically, that the muni market would be better off, or at least far less volatile, without muni mutual funds? Watching outflows from munis based solely on what amounts to an equity-market mechanism seems to negate much of the advantage of owning munis. Fund managers start selling to cover potential redemptions, and share prices fluctuate like a roller coaster, having nothing to do with the underlying assets.
P.H., Oregon
Are the insurance companies going to come through and honor their word – to be there no matter what – with interest and principal? This better be the case. Is your company hearing anything or putting the pressure on them?
L.J., Colorado
Regarding your article on Detroit (“Investors in Michigan Munis Strike Back“), I think Michigan’s governor needs to understand the impact of his short-sighted decisions. Every day it seems to get worse in the muni market. I keep reading that a rally will occur soon. What is your opinion?
V.C., California
Are there any similarities between Detroit’s situation and the “Whoops” (WPPSS) muni bonds from the ‘70’s?
M.G., Florida
Though there have been numerous articles on how the new government of Puerto Rico has made great strides in fixing its pension problem and operating budget, the ratings agencies refuse to increase their credit rating and seem to focus on the negative. Where do you think the bottom is on Puerto Rico bonds and how will their electric bond sale affect the market?
S.S., New York
I own Detroit General Obligation water bonds insured by National. My financial adviser told me that as the city’s problems wind through the courts, Detroit won’t pay timely interest and only my principal of $40,000 will continue to be insured by National. The price of these bonds stands at 86.999 as of July 22, 2013, and continues to go down every day. Your thoughts?
E.M., Michigan
My husband and I have quite a few Detroit General Obligation bonds back by AMBAC and other insurers. Aren’t the insurers responsible for paying us if the city defaults on these G.O. bond payments?
L.J., Colorado
We received an e-mail warning bondholders of higher interest rates and strategies to make a lot of money quickly. More than half of our retirement portfolio is with FMSbonds. We entrusted our funds with you in the hope that we do not have to worry about the future, regardless of interest rates, etc.
H.D., Minnesota
Can you explain what insurance is and how it works? What is the risk? Is a bond with insurance as safe as a CD with FDIC insurance?
D.R., New York
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.