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Now what happens - Munibond Alert Dissolution?
Old 01-14-2012, 07:59 AM   #1
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Now what happens - Munibond Alert Dissolution?

I received an event alert indicating that there has been a "dissolution" of my Highland California Redevelopment Agency municipal bond. I tried calling Fidelity and of course the fixed bond desk is closed until next Tuesday. The bond is insured by AMBAC. Does anyone have any knowledge of what happens? Am I guaranteed back by principal? When?
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Old 01-14-2012, 08:11 AM   #2
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California is allowing the redevelopment agencies to be closed. That is probably the "dissolution" mentioned in the notice you received. According to this article California RDA Law Upheld - The Bond Buyer Article there is no intention to default or not repay the outstanding obligations. Your bond should continue to be mature and pay coupons as agreed.

Quote:
According to the state’s reading of the law, when the agencies are shut down, the money to pay debts would be put in a special fund and bondholders would get paid, said H.D. Palmer, a spokesman for the Department of Finance. In this year’s state budget, the state directed that $5 billion should go toward payments on the bond debt, Palmer said. The state expects to have $1.7 billion left after the bond payments are made to fund other state budget items. The state’s 400 RDAs have $20 billion of bonds outstanding.
The insurance is an additional guarantee. Relax and enjoy the weekend.
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Old 01-14-2012, 08:25 AM   #3
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Awesome. Thanks, Michael, for the quick reply.
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