Municipal Bond Forum

In your article, you said misinformation in the market has created a number of outstanding opportunities. You should’ve said that it has done considerable damage.

L.L., Virginia

I read your response to the New York Times article on how policymakers are trying to figure out how states might be able to declare bankruptcy to relieve massive debt. The plausible case for state-level bankruptcy is more likely focused on unfunded pension liability, not current muni obligation/revenue matching capabilities. The bankruptcy poster child is General Motors. If GM were a state, would its name be General Motors?

J.S., New York

I saw your message in the Dallas Morning News that put the muni market in perspective. As a fairly significant investor in municipal bonds, I have been alarmed and puzzled about the market’s negative actions in recent weeks and have found no answers that make sense to me. I hope your message results in a stable and improved market over the days and weeks to come . Thank you again.

J.G., Texas

Do individual tax free municipal bonds also reflect a good tax-free income for someone who is in a lower tax bracket than 35% (I’m in the 28%)? I visited a broker who suggested I invest in an individual tax-free municipal bond. They charge 1% to manage the bonds. I visited your Web site and am reluctant to let his firm purchase the muni bond for me since it appears I can buy an individual muni bond through you at a lesser fee and won’t have the ongoing 1% his company would charge me. Your opinion is appreciated.

C.T., Pennsylvania

I own a number of zero coupon non-callable munis that are Escrowed to Maturity (ETM) in U.S. Treasurys. All mature in the next 2 to 17 years. Additionally, they are insured (although the value of that insurance may now be dubious). Given that U.S. Treasurys are rated “AAA” at the moment, why are all the muni ratings (underlying and otherwise) below that (typically “BBB” in my case)?

A.B., Pennsylvania

According to the New York Times, there are discussions in Washington that would allow states to declare bankruptcy and be relieved of their pension and municipal debt obligations. In your opinion, what is the likelihood that laws/rules will be made to allow states to default on their municipal bond debt? If this is allowed, what effect could it have on municipalities, counties, hospitals and other issuers of muni bonds? Could it possibly have any effect on bonds escrowed to maturity?

V.G.

As a resident of New York state what other kinds of munis can I buy, i.e. national, territories? Also, what is a national muni?

J.H., New York

I have more than $200,000 in muni bonds with fairly long maturities. None are subject to the AMT and almost all are insured, though I understand a number of insurers have defaulted as well. I’m somewhat worried and would appreciate interest continuing to be paid despite a decrease in bond values. I have taken past gains — but not in munis — for the gain or loss. Your thoughts?

R.H., Ohio

Meredith Whitney, the banking analyst who is predicting massive defaults, is like Nouriel Roubini (the economics professor): She got one call right — just one — and now she thinks she’s a genius and an expert on everything. She’s better than Roubini, but that’s like saying the 1963 Mets were better than the 1962 Mets.

I.F., New Jersey

Remind me again, what are the most viable revenue streams I should be looking for to support my municipal bonds these days?

G.V., South Carolina