Municipal Bond Forum

Remind me again, what are the most viable revenue streams I should be looking for to support my municipal bonds these days?

G.V., South Carolina

My 88-year-old mother has more than  90% of her assets in muni bonds of various states. The issues are laddered over the next 17 years and all are investment grade, with most rated “A” or higher. They are revenue (mostly) and General Obligation (GO) bonds. Mom is very worried over reports flooding the media quoting Meredith Whitney and her predictions on muni defaults. Her portfolio of munis is seven figures and provides for most of her annual expenses. I manage mom’s portfolio and want to do the right thing for her. What should I do?

M.K., Arizona

Although The New York Times may not be a great financial reporting organization, their recent article says municipalities are having great difficulty, all of which is not news. They view this as trouble ahead. Any comment?

M.K., New York

I have about $200,000 invested in several municipal bonds with Wells Fargo Advisors. On “60 Minutes” Sunday, they said there is a growing problem in the muni market, with several states not being able to fulfill their obligations. A major problem was predicted in this market within the next 12 months. What do you think? Should I divest my holdings?

B.S.

Please address the issue, recently described in The Wall Street Journal, that the bond rating agencies rely on state and local governments to provide updated financial information and that, in most cases, the agencies are basing their evaluations on information that is out of date.

G.S., Florida

Does FMS rate the bonds independently or do they rely on S&P, Moody’s and Fitch for their ratings? And, where is the “sweet spot” for munis now when looking out over the yield curve?

C.N.

What is your feeling on tobacco bonds – buy, hold or sell? Prices are way down. How much risk is there in holding?

R.L., Florida

Your article on the value of munis right now is on the money and you bring the hay to the barn before it gets wet. Love your insight.

G.P., Wisconsin

I live in California and all of my investments, $400,000, are in long-term California muni bonds for income and easy transfer to my daughter. I’m concerned that all of my eggs are in the basket of California. Should I spread my bond purchases into other states in case California runs into financial difficulties?

C.K. California

Thank you for the GM article, but I still do not understand what you mean when you say bondholders “will receive 10% equity in the new GM along with warrants for an additional 15%.” If I own 100 of the 9.40% bonds, how many shares of stock and warrants will I receive?

J.C., Florida