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FMSbonds, Inc.'s Bond Forum™ is an exclusive opportunity for investors to submit questions and comments on the bond market or to respond to one of our articles.
To participate, just send us an e-mail. Be sure to include your name or initials and your state of residence. Posted e-mails may be edited for length and clarity. If you prefer a private response, please note that in your e-mail. Responses are provided by James A. Klotz, president and co-founder of FMSbonds, Inc., a municipal bond specialist for more than 35 years; Dr. Jay H. Abrams, chief municipal credit analyst; and other members of the firm as noted.
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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., Florida
Currently, 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 York
Many 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.,Texas
We 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.