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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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After I pass, how will my municipal bonds, held in a trust, be split among several beneficiaries? Are muni funds the better option?- R.F.
We have never been proponents of bond funds because unlike individual bonds, there is no stated maturity date and consequently no promise to return principal.
Distributing bonds from a trust to multiple beneficiaries does not pose a problem. It merely requires dividing the account, based on market value at the date of death.
Great article on Puerto Rico, “Puerto Rico Governor Unveils New Budget Plan.” But why did you refer in the last sentence to the governor’s plan as perhaps providing "a ray of hope"? I thought the upgrade earlier this year of Assured Guaranty, which insures some Puerto Rico bonds, was already “a ray of hope”?
- B.P., Florida
We agree with your thoughts regarding Assured Guaranty. However, the majority of Puerto Rico debt is not insured.
What is the status of the Build America Bonds (BABs) program?
- S.S., New York
James A. Klotz responds: The Build America Bonds program, signed into law Feb. 17, 2009, enabled municipalities and certain political subdivisions to issue taxable municipal bonds that were supported by federal subsidies. This program expired Dec. 31, 2010.
As we described in an article last month, “Pols Push for BABs,” there are two Senate bills calling for the revival of the program. Sen. Ed Markey's bill, known as the Bolstering Our Nation's Deficient Structures Act, is modeled after the Build America Bonds Act of 2013, which was introduced by Rep. Richard Neal.
Both bills are still in committee.
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.