Municipal Bond Forum
UBS plans to mark their clients’ auction-rate securities
Q
UBS is going to mark their clients’ auction-rate securities. Do you have any idea how they are going to value a security that has no bids to buy?
A
James A. Klotz responds:
Good question! According to what we are reading, UBS is planning to price these securities based on an “internal computer model.” Since they have not indicated their willingness to purchase these securities at these marked down prices, we would guess this is a symbolic action taken out of concern for future legal liability.
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