Municipal Bond Forum
Beware of tobacco bonds rated below investment grade
Q
In your article, “Clouds Darkening for Tobacco Bonds,” you don’t mention the status of tobacco bonds that are insured. I have California tobacco bonds insured by BHAC. Should I be concerned?
A
James A. Klotz responds:
Your state-enhanced BHAC-insured California tobacco bonds should not be confused with those referred to in our commentary. Your bonds carry high investment grade ratings by Moody’s and Standard & Poor’s (Aa1/AA+).
Our message is aimed at investors holding tobacco bonds that have been downgraded below “investment grade,” particularly if their investment objectives do not include speculation.
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