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| BondsOnline.com: instant access to and extensive coverage of over 3.5 million stocks, bonds, indexes and other securities covering major and emerging markets and exchanges across the globe. |
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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
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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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Bargain Bin Muni Bonds |
Forbes.com - Sept. 22, 2009 - by Maurna Desmond
Ambac's downgrade left thousands of insured bonds without ratings, but many may still offer solid returns.
When Ambac lost its sterling credit rating last fall, tens of thousands of municipal bonds backed by the insurer also lost their "AAA" ratings, sending many investors running for the hills. But unrated paper isn't scary if you do your homework, according to one industry veteran.
"Just because the debt is non-rated does not make it a bad bond," says Matt Dalton, chief executive of Belle Haven Investments, a White Plains, N.Y., firm. "In the case of Ambac insured credits, this is more true than not," he says. "The fun exists in finding these smaller deals that came to market with no underlying rating."
Municipalities selling bonds used to rely on the triple-A ratings of bond insurers like Ambac. That's because the insurance "wrapper" effectively let the bond issuers piggyback on the rating of the insurers. That relationship crumbled when Ambac ( ABK - news - people ) lost the rating in 2008 due to its heavy exposure to collateralized debt obligations and mortgage-backed securities. ( See "Ambac Loses Twice.") Without a solid rating, many bond issuers lose out on a big group of institutional buyers who can only invest in highly rated securities.
There are thousands of unrated bonds to choose from, especially since the implosion of the firms that used to dominate the market for insuring them. As one of the "Big Three" bond insurers, along with FGIC and MBIA ( MBI - news - people ), Ambac had fairly rigorous standards when it came to underwriting since its livelihood depended on correctly gauging claims down the road, according to Dalton. When it lost its top rating, Ambac orphaned more than 25,000 bond issuances.
Many of the bonds are still investment-grade in terms of fundamentals, or the borrower's ability to pay, but have a stigma of "no rating," or NR, says Dalton. For those willing to do their homework on this type of munis, the opportunities seem to be aplenty.
For instance, Bayou La Batre, a town in Mobile County, Ala., has a general obligation bond backed by the full faith and credit of the issuer due in seven years. This bond traded on Sept. 10 at a yield of 5.7%. Similarly, Georgetown County in South Carolina has a water and sewer revenue bond due in 2018 that trades at 5.66%. Both were insured by Ambac and would still trade closer to 3% or lower in yield if the firm hadn't been dinged. "Nothing on the underlying credit has changed," says Dalton, who owns similar bonds but none that used to be backed by Ambac, yet.
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| Stuff to look at |
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| BondsOnline Advisor |
Income Security Recommendation January 2013 Issue.
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