Comments
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KLWas the cinematographer for this interview the same guy who shot the Joel Schumacher film Batman & Robin?
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FRHere is a recent interesting recent story of Higher Education credit risks referenced at 27:00 https://www.bostonglobe.com/metro/2019/01/15/hampshire-college-facing-financial-pressure-considers-merger/hKHgkWoZ1Ca5bs952kknCL/story.html
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GHPoint about the call features was quick, but very important: (1) Extreme majority of muni par weighed issuance is at a 5% Coupon, with YTC (or YTW for investors) generally ranging anywhere from 2.5% to 4.0% post-call date, which leads to original issuance prices premiums up in the 120s, depending on where you are on the curve, the call date tenor, and the overall rate environment (up in the 130s during 2016). (2) Standard Par-Call Tenor for bonds at issuance is 10 years from sale date, but there have been more short calls (5, 7, or 8 year) since tax reform, because of the elimination of advance refundings (used to be able to refund before stated call date). (3) Because of this premium original pricing structure, unless an issuer's credit takes a turn for the worst, 99% of 5% coupon structures are called. "Rolling down the curve" also helps bond savings for the refunding process. Obviously, this would be moot if you think there is a new high rate environment we are entering. One last separate point: There are hundreds of billions of taxable municipals that are available for those with tax-advantaged accounts, generally with larger par amounts and way fewer CUSIPs.
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MPAny bond pros out there have thoughts on TFI ETF or Vanguard’s Ca Muni mutual funds?
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WBMy Muni portfolio just got back to the level it was prior to Trump election even after 2 years of coupons... Holding any duration has been a tough up until last 60 days.
Chapters
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What’s the Overall Case for Municipal Bonds Ownership?
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How Have Municipal Bonds Performed?
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What Unique Attributes Do Municipal Bonds Possess?
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How Do You Analyze the Risks in Muniland?
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In Which Geographies Do You See Risks & Opportunities?
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How are Revenue Bonds Different from General Obligation Bonds?
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In What Ways has the Muni Space Changed?
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How Do You Think about Duration & Interest Rate Risk?
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How Do You Advise Clients to Start Evaluating Credit Risk?
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What’s Your Approach to Finding ‘Red Flags’ in Munis?
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In What Ways is ESG Changing the Muni Landscape?
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What Municipal Investments Would You Avoid?