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.
Do the worst case yields cited by your firm account for an adjustment of principal in the return? In a recent Wall Street Journal article, the columnist advised bond buyers to ask this very important question.
V.A., Nevada
A recent column in the Wall Street Journal said brokers overstate the yield on municipal bonds and that 4.00% returns on a bond are an illusion. On my bond purchases from FMSbonds, I always know the yield to maturity and yield to call. I have enjoyed purchasing many bonds from FMSbonds in 2015 that pay over 4.00% and, in a few cases over 5.00%. Can you address this please?
B.A., Indiana
So let’s say the Fed goes crazy and raises rates a whopping 1/4%, as you suggest in your article, “The Fed Didn’t Move. Cue the Conjecture.” What kind of impact will this translate to someone who owns a high-yield muni bond fund? If you had a liquid $50,000, what would you do with it, if you could only invest for six months?
M.G.
I read that Puerto Rico stopped setting aside money to pay the General Obligation interest payment in January 2016. Do you think this is indicative of their intent not to make the January 2016 payment?
K.H., Indiana
What are some of the scenarios we bondholders can now expect concerning the outcome of the Puerto Rico debt problem?
R.W., North Carolina
If Puerto Rico gets approval to file Chapter 9 – and does – will this be good or bad for the bondholders?
D.H., New Jersey
In “Puerto Rico: Unable or Unwilling?” you mentioned COFINA bonds, which I own. Payment is due Aug. 1 and I noted the revenue for those bonds was fully collected by year-end 2014. Can we expect timely payment?
C.G., New Hampshire
Lots of “ifs” in your article “Puerto Rico: Unable or Unwilling?” Existing bonds insured by AGC and maybe National might pay off if we’re lucky. Payment for COFINA bonds are due Aug. 1. Puerto Rico’s debt is “CCC-” on its own. There are better opportunities out there, even Chicago!
J.M., Florida
In your article, “Puerto Rico: Unable or Unwilling?” you quote the president of the Government Development Bank as saying officials expect to negotiate a “consensual adjustment” regarding Puerto Rico’s debt. What kind of haircut are we talking about? I committed my financial resources to their bonds and now I’m supposed to give even more.
G.R., Michigan
In your article, “Report: Muni Investors Had a Lousy Spring,” I really like your attitude and your strategy. What advice do you have for a guy whose money is tied up in a large 401(k)? I’m 66 and retiring soon.
R.O., Florida
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