muni bonds are poised for serious problems

[haha]

Unlike corporations which may only issue debt for special project, municipalities are constantly rolling over the debt. Hence part of the problem. So they are constantly engage in interest rate arbitrage.

This is the first I have heard about this. Corporations that I own frequently issue bonds for "general corporate purposes". Unless I am mistaken, interest rate and yield curve arbitrage is an important part of a CFOs job.

Ha

 

[clifp]

This is the first I have heard about this. Corporations that I own frequently issue bonds for "general corporate purposes". Unless I am mistaken, interest rate and yield curve arbitrage is an important part of a CFOs job.

Ha

It certainly depends on the corporations. Financial and corporations that have a financial operation do have many bonds issues and the CFO do exactly has you say.

Still if you look at the Dow components the JNJ, MMM, XOM, CVX,HD many of them only 15 or less bond issues. The tech stocks, INTC, MSFT, and CISCO have even less 1/2 dozen bond issue and of course AAPL has no debt. This means they are only issuing a couple of bonds a year.

My perception is that on whole US corporation are carrying less heavy debt load say a 25% debt to equity ratio and are really less on debt rolling over than municipalities.

 

[haha]

My perception is that on whole US corporation are ... less on debt rolling over than municipalities.

No doubt about that!

Ha