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I own some Jefferson County bonds due in 2015 that are insured by Ambac. I can’t understand why, with the increasing likelihood of imminent default, they are still trading in the low to mid 90s. Should I sell, or is something afoot that would cause these serial bonds to be paid off in full in 2015?
- W.L., FloridaCurrently, Ambac is in the process of emerging from bankruptcy and has maintained its claims-paying ability through these difficult times.
Although there are no guarantees regarding the eventual redemption of your securities, based on the prices at which these bonds are trading, market participants are betting on a positive outcome.
Were Jefferson County bonds insured? If they were, would the principal be paid? I only invest in insured bonds.
- T.R., New YorkMany of the Jefferson County bonds are insured. Interest and principal are currently being paid by the insurers.
I read your article, “A Cautionary Tale,” on the problems facing Jefferson County. I know their problems well. I was almost burned by New York and Denver (airport) bonds. However, they are less risky than corporates.
- S.O.,TexasWe couldn’t agree more.
This report is produced solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. This report is based on information obtained from sources believed to be reliable but no independent verification has been made, nor is its accuracy or completeness guaranteed.