CDZ Who's Buying This Crap?

[william the wie]

People are buying muni-bonds that are paying 7.5% tax-free. That's free of federal income tax and if it is issued in your own residential jurisdiction it is usually free of all applicable local and state levies.

I was checking to see if Blue Wall munis were still "We R Junk". Well yeah, kind of. I'm not sure that bonds paying the taxable equivalent XX.X% in this interest rate environment are of high enough quality to be considered garden variety junk. Anybody know what is going on here?

 

[Mac1958]

People are buying muni-bonds that are paying 7.5% tax-free. That's free of federal income tax and if it is issued in your own residential jurisdiction it is usually free of all applicable local and state levies.

I was checking to see if Blue Wall munis were still "We R Junk". Well yeah, kind of. I'm not sure that bonds paying the taxable equivalent XX.X% in this interest rate environment are of high enough quality to be considered garden variety junk. Anybody know what is going on here?

I just checked my dashboard (out of morbid curiosity) and yeah, there are some with coupons as high as 9.000%, although most of them are trading at a pretty high premium. There's a few trading around par. Scattered all over the place, including (of course) Puerto Rico. MOST of them are UNRATED. Most have sinking funds.

To answer your question, only speculators, desperate yield-seekers and newbies would buy these.
.

 

[william the wie]

People are buying muni-bonds that are paying 7.5% tax-free. That's free of federal income tax and if it is issued in your own residential jurisdiction it is usually free of all applicable local and state levies.

I was checking to see if Blue Wall munis were still "We R Junk". Well yeah, kind of. I'm not sure that bonds paying the taxable equivalent XX.X% in this interest rate environment are of high enough quality to be considered garden variety junk. Anybody know what is going on here?

I just checked my dashboard (out of morbid curiosity) and yeah, there are some with coupons as high as 9.000%, although most of them are trading at a pretty high premium. There's a few trading around par. Scattered all over the place, including (of course) Puerto Rico. MOST of them are UNRATED. Most have sinking funds.

To answer your question, only speculators, desperate yield-seekers and newbies would buy these.
.

That was my first thought but that many idiots with that much money seems incredible.

 

[Mac1958]

People are buying muni-bonds that are paying 7.5% tax-free. That's free of federal income tax and if it is issued in your own residential jurisdiction it is usually free of all applicable local and state levies.

I was checking to see if Blue Wall munis were still "We R Junk". Well yeah, kind of. I'm not sure that bonds paying the taxable equivalent XX.X% in this interest rate environment are of high enough quality to be considered garden variety junk. Anybody know what is going on here?

I just checked my dashboard (out of morbid curiosity) and yeah, there are some with coupons as high as 9.000%, although most of them are trading at a pretty high premium. There's a few trading around par. Scattered all over the place, including (of course) Puerto Rico. MOST of them are UNRATED. Most have sinking funds.

To answer your question, only speculators, desperate yield-seekers and newbies would buy these.
.

That was my first thought but that many idiots with that much money seems incredible.

There's a ton of people chasing yield right now, and they're making some really lousy decisions.
.

 

[HenryBHough]

Munis were very good to me some 40 years ago. Especially since I was living in a VERY high tax state at the time. But about 30 years back strange things started happening, particularly in California and risk of "Double Tax Frees" lost all the shine. Now U.S. Bonds were never great for return but, these days, when considering buying them you should also consider a possible practical application. Who knows, there might one day be a great toilet paper shortage and you wouldn't want to be unprepared.

 

[B. Kidd]

People are buying muni-bonds that are paying 7.5% tax-free. That's free of federal income tax and if it is issued in your own residential jurisdiction it is usually free of all applicable local and state levies.

I was checking to see if Blue Wall munis were still "We R Junk". Well yeah, kind of. I'm not sure that bonds paying the taxable equivalent XX.X% in this interest rate environment are of high enough quality to be considered garden variety junk. Anybody know what is going on here?

I just checked my dashboard (out of morbid curiosity) and yeah, there are some with coupons as high as 9.000%, although most of them are trading at a pretty high premium. There's a few trading around par. Scattered all over the place, including (of course) Puerto Rico. MOST of them are UNRATED. Most have sinking funds.

To answer your question, only speculators, desperate yield-seekers and newbies would buy these.
.

Excellent thread, fellas'................

 

[william the wie]

Munis were very good to me some 40 years ago. Especially since I was living in a VERY high tax state at the time. But about 30 years back strange things started happening, particularly in California and risk of "Double Tax Frees" lost all the shine. Now U.S. Bonds were never great for return but, these days, when considering buying them you should also consider a possible practical application. Who knows, there might one day be a great toilet paper shortage and you wouldn't want to be unprepared.

They're a little too stiff for my purposes.

 

[william the wie]

Utlities with PEs in the mid 20s is bad bur munis at this level are far worse.

 

[320 Years of History]

I just checked my dashboard (out of morbid curiosity) and yeah, there are some with coupons as high as 9.000%, although most of them are trading at a pretty high premium. There's a few trading around par. Scattered all over the place, including (of course) Puerto Rico. MOST of them are UNRATED. Most have sinking funds.

To answer your question, only speculators, desperate yield-seekers and newbies would buy these.
.

The "unrated" nature of some securities, particularly munis, is often because the issuer just doesn't feel the need to have the issue rated. One would hope that total newbies would refrain from going that far out on a limb, but some "thirsty" ones mingh. I won't suggest that a novice investor put much if any money into unrated individual bonds, however, some bond funds that have material investments in them are a reasonable choice. A fair quantity of unrated munis carry far less risk than their lack of rating alone would indicate. Those are the ones to buy, provided one buys them at original issue, but that has to do with the price one will pay, not the risk one will assume by buying them.