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| 5/10/2013Market Performance |
| Municipal Bonds |
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S&P National Bond Index
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3.00% |
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S&P California Bond Index
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2.96% |
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S&P New York Bond Index
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3.13% |
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S&P National 0-5 Year Municipal Bond Index
|
0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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| More |
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| Income Equities: |
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| Preferred Stocks |
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S&P U.S. Preferred Stock Index
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848.03 |
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S&P U.S. Preferred Stock Index (CAD)
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636.26 |
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S&P U.S. Preferred Stock Index (TR)
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1,701.05 |
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S&P U.S. Preferred Stock Index (TR) (CAD)
|
1,276.26 |
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| REITs |
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S&P REIT Index
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174.07 |
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S&P REIT Index (TR)
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425.30 |
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| MLPs |
|---|
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S&P MLP Index
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2,469.58 |
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S&P MLP Index (TR)
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5,428.50 |
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See Data
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Pre-Refunded Munis Are A Bargain |
Forbes.com - Jan. 11, 2011 - posted by MARILYN COHEN
During the summer of 2010 we had a Teflon bond market: Every bit of bad news, terrible bond events and currency misfortunes rolled right off the bond market. It was like your fried eggs sliding effortlessly out of the Teflon pan.
Yields on all bonds were low; some, outrageously so. Then, with QE2 and the November elections over, investors felt their Teflon protection melting away as bond yields began their relentless march upward. The bond market was no longer forgiving. From November 3rd to December 31st the ten year Treasury 2.626% due August 15, 2020 lost 6.25%. Corporate prices lost luster and municipal bonds were getting slammed.
Billions of dollars flooded out of municipal bonds and especially muni bond funds–funds were once the retail investors’ vehicle of choice. There’s been no where to run or to where to hide unless you had the secret sauce recipe: Tax free municipal bonds, escrowed and guaranteed with US Treasurys.
Pre-refunded munis, are old bonds paying high coupons and whose issuer desires to retire them even though they don’t mature or can’t be called until their proper maturity or call dates. Pre-res as they’re called, are created when an issuer markets new debt to refinance older, more expensive debt. Like refinancing your more expensive mortgage. In the home refinancing analogy, you are still responsible for your mortgage principal and interest payments. That’s where the similarities cease. Once a municipal bond is refinanced, (prerefunded) the issuer uses the proceeds of the new issue and purchases US Treasury securities (collateral) that are used to pay the interest and principal on the original, more expensive debt until maturity or the call date, whichever the escrow agreement states.
If you’d like some data points: During the Teflon summer, yields on prerefunded paper maturing April 1, 2012 were yielding roughly .35%-.40%. Now, many months later, that same April 1, 2012 paper yields .80%-.85%. Yep–almost double the yield from the frothy, Teflon summer.
For the complete article.
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| Stuff to look at |
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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