Municipal Bond Forum

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

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

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?

M.C.

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

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

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?

J.K.

I hear the Feds are going to assist the municipal bond market with $500 billion or more of purchases. Has it happened yet?

G.M.

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

What are your views of the municipal bond market in the wake of the coronavirus (COVID-19)?

D.J., Florida

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