For the second time in recent years, we have a tremendous opportunity in high quality municipal CEFs — don’t miss it!

Of course you should be interested!

There are at least eight reasonable explanations for recent Municipal Bond price weakness — there are at least eight excellent reasons why investors should be viewing this weakness as a buying opportunity.

Contact Steve for a list of ten Closed End Funds to check out for appropriateness.
http://kiawahgolfinvestmentseminars.net/ Inv/index.cfm/18393

Me, I don’t see it.

Of course, who knows – we might have a Congress that would happily plunge us into the dark ages to avoid giving a bailout in six months.

Many issuers have since been refunding their (insured) debt at lower rates with (uninsured) new bonds. Oh, and with lower interest rates, that’s improving their finances. But I bet that’s not in Meredith’s report, nor is the fact that debt service for all state, county, and city/town debt is only about 1.5% of the economy. That figure, by the way, assumes debt retirement, not just interest payments.

But I’m guessing that that’s not in the report, either.

As of today, according to Bondview.com, there are $2.8 trillion in outstanding muni bonds and 99.7% have not defaulted. That leaves about .03% of muni bond that have defaulted. Of those, most are not safe sector bonds like land use (ie, Florida housing developments) , private activity ie, (Harrisburg Incinerator), Hospital, Casino, Retirement.

Safe Sector bonds like General Obligation, water, sewer, power rarely default. We are only now seeing the outcome of defaults. In almost all cases, the state has stepped into and taken over the finances of the local municipality until they can get back on their feet. Harrisburg, PA. is a good example.

To see a portfolio of muni bond defaults go to:

http://www.bondview.com/reportcard/index  /portfolio/656

Good Luck To All
Jim Walker
http://www.BondView.com

But this is all just common sense. The best way to see whats happening in the muni marketplace if to

There are a lot of factors involved in Chapter 9 bankruptcy, or Chapter 11 of municipal corporations. Have you seen a decent predictive model of municipal default? I thought not.

Felix, why are you so confident of a Federal bailout of the States? Is it because of the precedent of Arkansas in 1937? What makes you so sure?

That’s all they could do afterall… the Monolines took in premiums of less than 1% of what they insured… so a 2% default rate would have wiped them out… what they got was more like a 20% default rate!

It will be the same with Muni bonds as it was with AAA MBS… they will simply pay out the coupons until they can’t. Any economic enviroment that causes major municipality A to default will likely have the same effect on municipality B.

What will be interesting is the conflict between the state and feds and the states and the locals. I think you will need to see public elections invalidated because locals will always vote their way out of paying.

IE… we borrowed too heavily for our new school/communitycenter/officepark/wastei ncenerator/seniorcenter and now the bill is comming due and we revuse to raise property taxes 100% to cover the short fall… we vote to default. The govenor of that state is going to have something to say about that. If he or she dosen’t than the Feds are going to have something to say about that… ect.

The era of free rides is comming to a close and the era of consequences is upon us!

*shaking head sadly, hoping this doesn’t happen*