Municipal Bond Forum

CDD Bonds Ratings

I have about $5.75 million in individual munis, I have over $600,000 in Community Development District (CDD) bonds. Are the bonds safe? Are the CDD districts in a good financial state? Both of the FMSbonds specialists I work with, Edie Nasello and Kara Lucas, have been a great help over the past 10 years. Hope I am not bothering you. I realize I am a pretty small fish in this lake.
W.S., Florida

James A. Klotz responds:

Please be assured, there are no small fish in this lake, and it is always a pleasure to hear from our clients and friends.We believe the lack of ratings on your CDD bonds is actually misleading.The homeowners that secure these bonds pay the debt service, which is included in their property tax assessment. Adding further support for these bonds is the significant migration to Florida of residents from high income tax states.As you know, higher interest rates will affect the market value of all fixed-income securities, but we don’t foresee any impairment of the credit quality of these issues.