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| Bonds Online |
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| 5/10/2013Market Performance |
| Municipal Bonds |
|---|
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S&P National Bond Index
|
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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Research Primer: The Risks and Rewards of Municipal Bond Arbitrage |
Seeking Alpha - May, 9, 2011 - By Research Recap
A recent paper from NERA Economic Consulting explains the risk components of municipal bond arbitrage and concludes that the strategy is not guaranteed to lose as some have suggested.
ollowing the “great recession,” state finances have continued to deteriorate. With many states now in crisis, municipal bonds have increasingly come under pressure. In the past few months, investors have fled municipal bond funds in increasing numbers. Many now think that the stress on state finances is so great that the only recourse available to states will be to default on the outstanding municipal bonds.
Over all, we conclude that municipal bond arbitrage strategies were not fundamentally flawed and guaranteed to lose as some have suggested. Instead, the strategies indeed carried risk, which when hit by “a perfect storm,” or a sequence of events in the credit crisis, indeed lost money.
Three years ago, a different type of stress hit municipal bonds. In late 2007 and early 2008, as stress on the financial markets reached a new high, a number of hedge funds and other investors lost millions of dollars on an investment strategy often labeled as “municipal bond arbitrage.”
Municipal bond arbitrage is a type of investment strategy that is often classified as a “yield arbitrage strategy.” Such strategies seek to capture the difference in yields on two types of debt securities.
For the complete article.
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| Stuff to look at |
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S&P Commentary and Newsletters: S&P
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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