Municipal Bond Forum

My 88-year-old mother has more than  90% of her assets in muni bonds of various states. The issues are laddered over the next 17 years and all are investment grade, with most rated “A” or higher. They are revenue (mostly) and General Obligation (GO) bonds. Mom is very worried over reports flooding the media quoting Meredith Whitney and her predictions on muni defaults. Her portfolio of munis is seven figures and provides for most of her annual expenses. I manage mom’s portfolio and want to do the right thing for her. What should I do?

M.K., Arizona

Remind me again, what are the most viable revenue streams I should be looking for to support my municipal bonds these days?

G.V., South Carolina

Meredith Whitney, the banking analyst who is predicting massive defaults, is like Nouriel Roubini (the economics professor): She got one call right — just one — and now she thinks she’s a genius and an expert on everything. She’s better than Roubini, but that’s like saying the 1963 Mets were better than the 1962 Mets.

I.F., New Jersey

I have more than $200,000 in muni bonds with fairly long maturities. None are subject to the AMT and almost all are insured, though I understand a number of insurers have defaulted as well. I’m somewhat worried and would appreciate interest continuing to be paid despite a decrease in bond values. I have taken past gains — but not in munis — for the gain or loss. Your thoughts?

R.H., Ohio

Although The New York Times may not be a great financial reporting organization, their recent article says municipalities are having great difficulty, all of which is not news. They view this as trouble ahead. Any comment?

M.K., New York

I have about $200,000 invested in several municipal bonds with Wells Fargo Advisors. On “60 Minutes” Sunday, they said there is a growing problem in the muni market, with several states not being able to fulfill their obligations. A major problem was predicted in this market within the next 12 months. What do you think? Should I divest my holdings?

B.S.

Please address the issue, recently described in The Wall Street Journal, that the bond rating agencies rely on state and local governments to provide updated financial information and that, in most cases, the agencies are basing their evaluations on information that is out of date.

G.S., Florida

Does FMS rate the bonds independently or do they rely on S&P, Moody’s and Fitch for their ratings? And, where is the “sweet spot” for munis now when looking out over the yield curve?

C.N.

What is your feeling on tobacco bonds – buy, hold or sell? Prices are way down. How much risk is there in holding?

R.L., Florida

Your article on the value of munis right now is on the money and you bring the hay to the barn before it gets wet. Love your insight.

G.P., Wisconsin