Municipal Bond Forum

FMSbonds, Inc.’s Municipal 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, and other members of the firm as noted.

Postings are listed by date. If you have any questions, please call us at 1-800-367-2663 or e-mail us.

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

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Muni market dead money? Billions say otherwise.

I own many bonds in my portfolio but haven’t bought any in more than a year. How can I justify buying bonds yielding about 2.50% when inflation is running at about 6.00%? Bonds with higher yields have steep premiums and possible calls. I think the municipal market is dead money for the foreseeable future.

M.S., Connecticut

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Sell municipal bonds at a premium?

Let me start by saying I am a municipal bond fanatic. My portfolio is comprised of approximately 250 issues, every one thoroughly researched. In general, I am a buy-and-hold to maturity/call investor. However, premiums for some of my bonds have gotten so high that in my view it made sense to sell, capture the capital gains and redeploy those funds into other municipal bonds that are overlooked and mispriced in the market. Do you always buy and hold to maturity/call, or do you sometimes sell?


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Investing in out-of-state municipal bonds

We’re thinking about purchasing muni bonds from outside of our state. Does FMSbonds have an article about this? I understand munis would be taxed at the federal level, but if we bought Treasuries, for example, there would also be state tax.

J.M., California

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Balance in municipal bonds

Is it wise to put all your money in municipal bonds? It’s tempting because they’re tax-free. The money markets are paying around 1% and are taxable. Should one have some balance in their investment program?

E.A., Florida

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Plans to aid cities and states

Unless Congress sets aside at least $200 to $300 billion to help states, they will start to default and many other problems will follow. Your thoughts?


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Financial stress on cities and counties from pandemic

Today there was a front-page piece in the newspaper about financial stress cities and counties are facing due to lack of revenue caused by the pandemic fallout. Should I be worried about them defaulting on bonds or failing to make interest payments?

M.B., Florida

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Reinvesting muni bond redemptions

I read your recent article about the significant rise in muni prices (“Muni Market Returns Rise Amid ‘Gluttonous’ Demand”). My muni portfolio has done very well. But even though prices have gone up, reinvesting redemptions at 1.5% yield-to-worst isn’t very attractive. Since you frequently state that the main purpose of municipal bonds is to generate a stream of tax-free income, it doesn’t seem too lucrative. In hindsight, your advice to invest in long duration municipal bonds was a great strategy. What are your thoughts for new investors or someone whose portfolio is having a lot of calls and maturities?

B.C., California

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