Municipal Bond Forum
Finding pre-refunded bonds
Q
I am interested in municipal bonds that are pre-refunded and collateralized in U.S. securities. The maturity can go way out, as I want high interest. Why do you rate some of the municipal bonds insured by MBIA as AAA? Do you think MBIA could weather two or three bankruptcies in municipal bonds? I think it’s doubtful. I consider insurance on municipal bonds valueless. Are you a member of CIPA or SIPC?
A
James A. Klotz responds:
The ratings we display on our Web site are assigned by Standard & Poors Corp. and Moody’s Investor’s Service. FMSbonds is a bond dealer, not a rating agency.
Based on the required reserve structure of bond insurers, such as MBIA, we are confident that MBIA could easily weather multiple defaults on issues it insures.
Yes, we are a member of SIPC.
Pre-refunded bonds carry shorter maturities because tax-free bonds are typically refinanced and escrowed to their call dates. You will find a number of these offerings on our Web site designated by a “pre” on the left of the YTM column.
Start here.
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.
This report is produced solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. This report is based on information obtained from sources believed to be reliable but no independent verification has been made, nor is its accuracy or completeness guaranteed.