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.
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
What is your take on Puerto Rico bonds? Is it safe to buy them again?
G.R., Hawaii
Our financial adviser says long-term municipal bonds “could have a lot of principal risk built into them because of their interest rate sensitivity. The solution is a combination of intermediate-term municipals and a portion of high-income munis to complement them and still maintain decent yields with much less interest rate risk.” We’re confused by the term “interest rate sensitivity.”
M.S.
Do you still believe in the premise of your article, “Muni Supply to Remain Tight in 2015“? CNBC today made it sound quite the opposite.
M.
In your article, “The Best Play for Today,” you say that the best values are premium bonds, even though it may seem “counterintuitive to many investors” (myself included). You have said in the past that one cannot claim a capital loss when a premium bond matures, even though one must pay tax on capital gains when a discount bond matures. My question is, can one claim a loss if a premium bond is called well before maturity, leading to the so-called “yield-to-worst”?
M.M., Tennessee
In an e-mail to me, you recommended a “AA”-rated premium bond maturing in 2043 and callable in 2020, with a yield-to-call of 2.60%. You said it represented “outstanding value.” I don’t agree. We’re in a 3.30% market for that quality of bond, and it’s almost certain to be called on its call date in five years unless interest rates rise dramatically.
E.O., Alabama
I had another thought after reading your latest article (“Know Your Expert“): I agree on continuing to buy tax-free bonds regardless of what the so-called gurus say. The only problem is, there are no bonds to buy. A perfect example is the bond offerings on your Web site. There used to be six pages, now there are fewer. What’s the secret of buying quality bonds at fair prices in today’s market?
L.S., Texas
Please don’t deride Meredith Whitney’s powers of prediction (“Know Your Expert“)! I thank her and FMSbonds for the greatest muni bond buying opportunity of my lifetime. I have her picture hanging in my office and eagerly await her next prognostication. My only complaint: The bonds are being called before I am interested in losing them.
A.B., Florida
You’ve moved away from tobacco bonds (“Clouds Darkening for Tobacco Bonds“), but they have differing parameters depending on the issue. Do you dislike the higher-rated ones (“BBB,” “A”) as well?
D.L., New York
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