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.
I have many Puerto Rico munis and they are insured by Assured Guaranty. If the commonwealth restructures these bonds, what will happen afterward? Will I lose value? Will the insurer pay me back what I lose?
B.C., California
I read an article that said it’s time to get out of munis. It said although they’re up 8.30% this year, interest rates are about to rise and investors are going to sell to protect their gains. What do you think?
A.G., Illinois
Regarding your article, “Push is on to Include Munis in New Banking Rule,” shouldn’t banks, as part of the new liquidity rule, be allowed to hold pre-refunded bonds, bonds insured by strong insurers and short-maturity bonds in compliance with their covenants?
C.K.
My understanding is that municipalities generally pay an upfront fee to bond insurers to “”wrap”” their bonds until maturity. If a municipality calls a bond early (for example, to refinance), does it get a pro-rated refund or does the bond insurer get a windfall profit?
M.M., Tennessee
With regard to the fiscal situation in Puerto Rico, do you believe there will be any difference between Puerto Rico municipal bonds that are insured and those that are not?
J.P.
Is your article, “Puerto Rico Moves To Strengthen Bank, Defend New Law,” good news or bad news?
M.B., Texas
Regarding your article, “Moody’s Downgrades Puerto Rico G.O. Debt“: Obviously the new law and downgrades are jolts to investment sanity after recent ups and downs. Puerto Rico has no revenue upside, their society has too many entitlements, etc. Do you envision them stopping payments on certain bonds or defaulting?
R.B., Arkansas
Regarding your article Eye-Popping Yields Are Right Under Your Nose: Waiting and watching is exactly what to do. Rates will revert to the mean and many municipalities that are in debt may default. So unless the bonds are insured by a reliable insurance company, this is no time to put money in munis.
M.E., New York
After I pass, how will my municipal bonds, held in a trust, be split among several beneficiaries? Are muni funds the better option?
R.F.
Great article on Puerto Rico, “Puerto Rico Governor Unveils New Budget Plan.” But why did you refer in the last sentence to the governor’s plan as perhaps providing “a ray of hope”? I thought the upgrade earlier this year of Assured Guaranty, which insures some Puerto Rico bonds, was already “a ray of hope”?
B.P., Florida
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