Muni Bond (and Muni Bond Fund) Discussion

[Mr._Graybeard]

I picked up a bond from the OSF hospital group of Illinois/Michigan yesterday. It's 3.25%, bought at a hair above par at 100.3. Maturity is in 2039 but callable in 2026. It's about the best deal I've seen lately on the secondary market.

 

[brewer12345]

I need to start looking again.

 

[COcheesehead]

I picked up a bond from the OSF hospital group of Illinois/Michigan yesterday. It's 3.25%, bought at a hair above par at 100.3. Maturity is in 2039 but callable in 2026. It's about the best deal I've seen lately on the secondary market.

Almost all my hospital related bonds have seen ratings down grades and outlooks decreased. I even sold one (rare for me) that had a pretty scary cash level.

I am not buying any in the medical space right now, though I still own about a dozen out of the 80 or so bonds I hold.

 

[Montecfo]

I sold my long held Muni CEF this week. The fund had rallied and I do have some concern we are going to have increased bankruptcies in the Muni world.

I may return to it later in the year.

 

[brewer12345]

I sold my long held Muni CEF this week. The fund had rallied and I do have some concern we are going to have increased bankruptcies in the Muni world.

In other words, more good news coming?

 

[jazz4cash]

My hospital bonds are strong and steady. Similar maturity as OP with 4% coupon.

 

[nwsteve]

My hospital bonds are strong and steady. Similar maturity as OP with 4% coupon.

Do you mind sharing your bond grade? I bought on Thurs a 11/2023 Fl univ bond with A- but yield was only 1.85. Still way better than tax 1.1 at Ally.

 

[jazz4cash]

I have 574218V83 MD Univ Med Sys rated A/A2. I paid par at issue in Jan 2017. Current price around 109. It’s always been above par except for that crazy blip last Feb.

 

[Mr._Graybeard]

Almost all my hospital related bonds have seen ratings down grades and outlooks decreased. I even sold one (rare for me) that had a pretty scary cash level.

I am not buying any in the medical space right now, though I still own about a dozen out of the 80 or so bonds I hold.

This is the third hosp bond I've bought since that one- or two-day bond tantrum in the spring. I stick pretty close to home on these; I have a pretty good idea which medical groups might be vulnerable and stay away from them.

I looked closely at OSF before buying in -- they've lost a lot of money during the COVID pandemic, but their 14 hospitals are mostly in midsize Illinois cities that haven't been hit hard by the bug. They also have one of the top children's hospitals in the country. I think they'll be OK.

 

[njhowie]

I generally stay away from hospital bonds. However, I do have a couple purchased over the past couple months because they are strong and can easily weather the current economic situation.

1. I have two issues of Cleveland Clinic bonds 67756A2P6 and 677561JM5 with maturities 1/1/22 and 1/1/26, my YTM on them are 3.17% and 3.28%. Cleveland Clinic has about $7 billion in cash and they just issued some new debt at ridiculously low yields, so I have no concerns. These are rated AA2.

2. I have 833096HG8 maturing 12/1/2025 with YTM of 4.98%. These are for a hospital system in Washington state. However, they are general obligation bonds of their county, so not exactly the same risks as other muni hospital bonds. These are rated A2. These are callable in December this year, and if called, my YTC will have been 2.5% for a 6 month term.

All of the above are taxable munis.

 

[aja8888]

I generally stay away from hospital bonds. However, I do have a couple purchased over the past couple months because they are strong and can easily weather the current economic situation.

1. I have two issues of Cleveland Clinic bonds 67756A2P6 and 677561JM5 with maturities 1/1/22 and 1/1/26, my YTM on them are 3.17% and 3.28%. Cleveland Clinic has about $7 billion in cash and they just issued some new debt at ridiculously low yields, so I have no concerns. These are rated AA2.

2. I have 833096HG8 maturing 12/1/2025 with YTM of 4.98%. These are for a hospital system in Washington state. However, they are general obligation bonds of their county, so not exactly the same risks as other muni hospital bonds. These are rated A2. These are callable in December this year, and if called, my YTC will have been 2.5% for a 6 month term.

All of the above are taxable munis.

I looked up the above three bonds on the Schwab trade desk and they are not available for trading. Any reasons why?

Trading history over the last few months shows customer sales to dealers, that's it.

 

[njhowie]

I looked up the above three bonds on the Schwab trade desk and they are not available for trading. Any reasons why?

Trading history over the last few months shows customer sales to dealers, that's it.

At any point in time, a brokers inventory will vary. If I pull these up on Fidelity (where I purchased) they currently show as unavailable as well.

A better resource for checking trading history and getting info is through EMMA:

https://emma.msrb.org/Security/Details/?id=67756A2P6

https://emma.msrb.org/Security/Details/?id=677561JM5

https://emma.msrb.org/Security/Details/?id=833096HG8

 

[aja8888]

At any point in time, a brokers inventory will vary. If I pull these up on Fidelity (where I purchased) they currently show as unavilable as well.

A better resource for checking trading history and getting info is through EMMA:

https://emma.msrb.org/Security/Details/?id=67756A2P6

https://emma.msrb.org/Security/Details/?id=677561JM5

https://emma.msrb.org/Security/Details/?id=833096HG8

Thanks, I was looking into picking up some individual bonds to hold for a few years to add to my fixed income pot. Maybe during trading hours they will become more available.

 

[njhowie]

Thanks, I was looking into picking up some individual bonds to hold for a few years to add to my fixed income pot. Maybe during trading hours they will become more available.

It's really tough right now and the pickings are slim in the muni space. Most everything is ridiculously priced - too high, but there are folks paying and taking the miniscule yield. I won't do it, and I recommend others not to chase itsy bitsy yields either. I would rather sit in cash with no risk (aside from inflation) as opposed to taking a yield below 2% with any bond. Be patient and wait for the sellers to come to you. We will have more days like the wild ones in March. Be ready for when they come.

 

[Mr._Graybeard]

I generally stay away from hospital bonds. However, I do have a couple purchased over the past couple months because they are strong and can easily weather the current economic situation.

1. I have two issues of Cleveland Clinic bonds 67756A2P6 and 677561JM5 with maturities 1/1/22 and 1/1/26, my YTM on them are 3.17% and 3.28%. Cleveland Clinic has about $7 billion in cash and they just issued some new debt at ridiculously low yields, so I have no concerns. These are rated AA2.

2. I have 833096HG8 maturing 12/1/2025 with YTM of 4.98%. These are for a hospital system in Washington state. However, they are general obligation bonds of their county, so not exactly the same risks as other muni hospital bonds. These are rated A2. These are callable in December this year, and if called, my YTC will have been 2.5% for a 6 month term.

All of the above are taxable munis.

I had a good one from Cleveland Clinic awhile back, had a great yield, like 5.25% tax-exempt. I think I picked it up during the "taper tantrum" around 2013-2014. It was called a year or two ago.

My current hosp bonds are from Aurora (now Advocate-Aurora) Health Care, 3.5% rated Aa3, will probably be called in a year; ProHealth of Waukesha County, Wis., rated A+/A1, 4.25% and 5%. ProHealth and Aurora are competitors in the affluent suburbs around Milwaukee. Aurora is the bigger group; it recently merged with a hospital group in northern Illinois to create the ninth-largest hospital system in the US.

This spring I picked up a bond from ThedaCare, a prominent hospital network in Wisconsin's Fox River Valley, during the muni panic. Rated A1, 5% yield, call date in 12/24. I've got one more little hospital bond for $5K from the Marshfield (Wis.) Clinic group. It's only rated A-, but at 4.5% yield I expect it to be called in February 2022. They're a pretty important health care hub in north-central Wisconsin, but they have had some financial ups and downs in the last 20 years. I wouldn't want to hold any of their long-term paper.

 

[COcheesehead]

I had a good one from Cleveland Clinic awhile back, had a great yield, like 5.25% tax-exempt. I think I picked it up during the "taper tantrum" around 2013-2014. It was called a year or two ago.

My current hosp bonds are from Aurora (now Advocate-Aurora) Health Care, 3.5% rated Aa3, will probably be called in a year; ProHealth of Waukesha County, Wis., rated A+/A1, 4.25% and 5%. ProHealth and Aurora are competitors in the affluent suburbs around Milwaukee. Aurora is the bigger group; it recently merged with a hospital group in northern Illinois to create the ninth-largest hospital system in the US.

This spring I picked up a bond from ThedaCare, a prominent hospital network in Wisconsin's Fox River Valley, during the muni panic. Rated A1, 5% yield, call date in 12/24. I've got one more little hospital bond for $5K from the Marshfield (Wis.) Clinic group. It's only rated A-, but at 4.5% yield I expect it to be called in February 2022. They're a pretty important health care hub in north-central Wisconsin, but they have had some financial ups and downs in the last 20 years. I wouldn't want to hold any of their long-term paper.

Are you confusing yield and coupon? Nothing is yielding what you posted.

 

[Mr._Graybeard]

Are you confusing yield and coupon? Nothing is yielding what you posted.

Yes, coupon.

 

[Montecfo]

In other words, more good news coming?

I expect so. I love to sell high then reinvest funds at lower prices.

And I think that will happen.

 

[COcheesehead]

Default rates of muni vs corp.

 

[njhowie]

Today I was able to get one that falls in the category I've been partial towards lately - within sight of (or after) the call date, only producing minimal yield to call (CD-type yield) but has hefty coupon. If it doesn't get called, then I get a very nice yield until they do call.

63165TCY9 - Nassau Cnty, NY 6.7% GO 4/1/2037 maturity, continuously callable right now (has been callable since 4/1/2020)

YTM = 6.65%
YTC = 0.807% (30 days)

So, essentially I accept that my yield will be 0.807% for the first 30 days (worst case), and then 6.7% thereafter.

https://emma.msrb.org/Security/Details/?id=63165TCY9

 

[aja8888]

Today I was able to get one that falls in the category I've been partial towards lately - within sight of (or after) the call date, only producing minimal yield to call (CD-type yield) but has hefty coupon. If it doesn't get called, then I get a very nice yield until they do call.

63165TCY9 - Nassau Cnty, NY 6.7% GO 4/1/2037 maturity, continuously callable right now (has been callable since 4/1/2020)

YTM = 6.65%
YTC = 0.807% (30 days)

So, essentially I accept that my yield will be 0.807% for the first 30 days (worst case), and then 6.7% thereafter.

https://emma.msrb.org/Security/Details/?id=63165TCY9

I click on your link and get the Emma terms of use page?

 

[njhowie]

I click on your link and get the Emma terms of use page?

Yes - first time you have to click that you accept terms of use for the site. It will save a cookie (unless you block) and then won't have to do it next time.

 

[Mr._Graybeard]

I see a lot of Birmingham/Jeff County, Ala., bonds with a nice yield People are bailing. Spotted this on a news feed, a city in the county declaring Chapter 9. So it does happen. https://patch.com/alabama/birmingham-al/city-fairfield-files-chapter-9-bankruptcy

I'm surprised that Patch.com is still a going concern. I thought they had gone belly-up years ago.

 

[aja8888]

Yes - first time you have to click that you accept terms of use for the site. It will save a cookie (unless you block) and then won't have to do it next time.

Got it, thanks!

 

[jazz4cash]

I don’t know much about Nassau County NY but have a favorable impression. It’s stunning to see a 6.7 coupon on a GO. I’d take a run at that.