| Bonds Online |
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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
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0.70% |
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| S&P/BGCantor US Treasury Bond |
400.09 |
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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)
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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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Removing Fear From Muni Investing |
Forbes.com - July 5, 2011 - By DIGBY CLEMENTS
Did you hear the one about the risky, low-grade muni bonds that outperformed the market and delivered stellar results to their investors? We didn’t think so.
To the detriment of current and future retail investors, the muni market stories that have gained traction during this latest cycle of volatility have focused almost exclusively on the higher default rates that a handful of analysts, including Meredith Whitney, believe may develop.
These prophets of doom and gloom have captured the fearful imaginations of U.S. investors and sent some of them running for the exits, cash in hand. We have to believe that some investors were attracted by the greener pastures of first-quarter equity markets, even though few market analysts chose to connect those dots.
The untold stories in the muni landscape – there are thousands of them in this $2.9 trillion market – stand in marked contrast to the common themes in recent media coverage. Here are three:
The Languishing Landfill: In late 1998, Hudson County, New Jersey, was getting ready to purchase a 167-acre site on the Hackensack River and put it to use as a landfill. An “improvement authority” issued $17.5 million in bonds – with a 6.125% coupon and a final maturity of January 1, 2029 – but was never able to resolve local environmental issues. The issue was assigned below-investment-grade ratings by Standard & Poor’s and Fitch Ratings but proved to be a reliable credit, making its scheduled payments on time and in full.
Without a landfill, the improvement authority had no way to generate income and, in each of the six years between 2003 and 2008, the State of New Jersey provided an estimated $4.5 million to help the authority with its debt service payments – good for bond holders who continued to get paid, but not good for angry tax payers who may have felt their money was being wasted.
In 2009, cash-strapped New Jersey stopped providing aid. At the same time, cash was getting tight for the improvement authority and it was approaching a scheduled bond payment. Clearly, something had to give.
In early January 2011, the good news broke: The bonds that financed this no-go project were going to be called at par later in the month – in other words, all bond holders were going to be paid back on the money lent, despite the fact that the project never got off the ground.
As many long-term municipal bond investors have seen countless times, officials found a way to resolve a credit problem and do right by their investors. At the end of the day, officials understand the implications of not paying their bond holders – reduced creditworthiness and higher pricing the next time they try to finance a project. The takeaway, aside from tax-free income for the savvy investors in the deal? A bond can look like garbage to others, but local governments can go to great lengths to honor their debts and protect their credit ratings. Of course, having a team of experienced analysts on hand to do a deep dive into the politics behind the deal and to identity the “right” opportunities like this always helps – and isn’t so easy for a standalone investor.
The Old College Try: In the 1990s, Nichols College, an old business college in Dudley, Massachusetts, found itself struggling with a new problem: declining enrollment. The school’s roots date back to 1815, but its future was starting to look uncertain.
A new management team was brought in to improve operations, enrollment and fund-raising. By 1999, a plan was in place to build a new residence hall and recreation facility, with the hope that enrollment trends could be reversed.
For the complete article.
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Income Security Recommendation January 2013 Issue.
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