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.
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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
What is the status of the Build America Bonds (BABs) program?
S.S., New York
In your article, “Puerto Rico Governor Unveils New Budget Plan,” you said, “If the governor’s plan is successful, this may provide a ray of hope for Puerto Rico bondholders….” What do you mean?
J., Connecticut
I think tax-free municipal bonds are a great investment and I have a number of them. But are they right for an IRA? I have to pay taxes when I withdraw from my IRA anyway, as ordinary income. Is there a better “taxable” investment that makes sense for an IRA?
P., Arizona
The city of Detroit, under the emergency management of Kevyn Orr, is attempting to treat general obligation municipal debt as unsecured. At stake and under consideration by the court are the terms “promise” versus “tax obligation.” Do you have any thoughts on the safest states?
V.A., Nevada
I’m even more confused from your article, “On Puerto Rico’s Finances, The Glass is Half…” I have a lot of Puerto Rico bonds. Is the situation improving or deteriorating? If I need to sell my bonds at a huge loss, I would like to do it before it is too late.
J.S., California
I hold Puerto Rico munis with a 15-to 25-year maturity timeline. What exactly happens if Puerto Rico munis were to be restructured? Would a restructure automatically involve all munis issued by the Commonwealth, or could revenue bonds stay outside of a restructure? By revenue bonds, I’m referring to COFINA (sales tax), PRASA and PREPA (utilities) bonds.
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