Municipal Bond Forum
When muni bond values decline
Like many others, I’m suffering watching my muni bond values decline. I’m a 20-year bondholder at FMS and never had this sick feeling before. Then again, I’m a little older (77) and the chances of collecting my principal at maturity is poor-to-maybe. I could have sold when values were up but chose not to, so here I am collecting dividends until call (hopefully) but maturity (20 years plus) is not going to happen. My bond specialist at FMS tells me that the situation is “manmade” and new bonds are more attractive than my bonds, so I guess I’m stuck with less desirable bonds that will outlive me. I do look forward to reading all of your newsletters.
James A. Klotz responds:
Of course, none of us are happy when our muni bond values decline, but we are assuaged that it isn’t due to a quality or credit problem and our tax-free income will continue to be paid in a dependable manner.
As the Fed reacts to inflation over the ensuing months, we expect the economy to slow and long-term interest rates to decline.
We outline this current phenomenon in our recent article, “OMG, What Happened to My Municipal Account Values?”
Do you have specific criteria for bonds you’re looking for? Let us know and we’ll e-mail you bonds that fit your needs. There is no charge for this service.
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.