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-FMS-BOND (1-800-367-2663) or e-mail us.

‘Ask this very important question’

Do the worst case yields cited by your firm account for an adjustment of principal in the return? In a recent Wall Street Journal article, the columnist advised bond buyers to ask this very important question.

V.A., Nevada

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Knowing the yield to maturity, yield to call on your bonds

A recent column in the Wall Street Journal said brokers overstate the yield on municipal bonds and that 4.00% returns on a bond are an illusion. On my bond purchases from FMSbonds, I always know the yield to maturity and yield to call. I have enjoyed purchasing many bonds from FMSbonds in 2015 that pay over 4.00% and, in a few cases over 5.00%. Can you address this please?

B.A., Indiana

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Puerto Rico’s January 2016 G.O. payment

I read that Puerto Rico stopped setting aside money to pay the General Obligation interest payment in January 2016. Do you think this is indicative of their intent not to make the January 2016 payment?

K.H., Indiana

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Puerto Rico: No answers yet

What are some of the scenarios we bondholders can now expect concerning the outcome of the Puerto Rico debt problem?

R.W., North Carolina

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Update, not recommendation

Lots of “ifs” in your article “Puerto Rico: Unable or Unwilling?”  Existing bonds insured by AGC and maybe National might pay off if we’re lucky. Payment for COFINA bonds are due Aug. 1. Puerto Rico’s debt is “CCC-” on its own. There are better opportunities out there, even Chicago!

J.M., Florida

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Uncertain ‘adjustments’

In your article, “Puerto Rico: Unable or Unwilling?” you quote the president of the Government Development Bank as saying officials expect to negotiate a “consensual adjustment” regarding Puerto Rico’s debt. What kind of haircut are we talking about? I committed my financial resources to their bonds and now I’m supposed to give even more.

G.R., Michigan

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