Muni Bond (and Muni Bond Fund) Discussion

[jazz4cash]

I did a test run of this strategy and I did find a muni I would consider but it paled in comparison to the ones in Howie’s list wrt rating and YTM. Anyway I keep looking and preparing for the time when my CDs mature. I mostly have IRA funds so the tax hit is a consideration plus my add-on CDs pay 3% and 3.7% with 20-30 months till maturity.

My NYC transit munis took a ratings downgrade but they remain strong price wise.

[njhowie]

Quote:

Originally Posted by jazz4cash My NYC transit munis took a ratings downgrade but they remain strong price wise.

I just sold my 2030 NYC MTA muni. I was able to post my offer behind dealer that was selling. Dealer's sold earlier, mine just sold. I made a slim profit, though I would have been just as happy with breakeven. The rating downgrade doesn't concern me as much as the word "dire"

Quote:

The status of MTA and its Related Entities operations and finances remain dire, and it continues to be extremely difficult to predict the course of these impacts due to the dynamic nature of the COVID-19 pandemic, including uncertainties relating to its (i) duration, (ii) severity and (iii) ultimate geographic spread, as well as with regard to what actions may be taken by other governmental authorities, particularly the federal government, and health care providers to contain or mitigate its impact.

https://emma.msrb.org/RE1355042-RE1053487-RE1462419.pdf

[COcheesehead]

I bailed on 3-4 muni’s in the last couple months. All on downgrades or outlooks that changed to negative. Total returns on all of them were positive, but I bought these as conservative investments, when they stop looking like that, see ya later.

[brewer12345]

Howie, I own some MTA bonds I bought as short term paper, but when they mature in 45 days or so I am done playing with them. Far too scary.

[jazz4cash]

There tons of NYC MTA bonds listed at Fido. Its amazing, really. I'm hanging on to mine but it is a tiny position and I don't want any more.

[njhowie]

Anyone holding any zero coupon munis? If so, which? What term and what yield to maturity/yield to call?

I have about 15 zero coupons. The one I hold and love most is an IL pre-refunded/defeased, GO issue that matures in December 2029 - no call allowed. They are rated AA and insured, but that is completely irrelevant since they are pre-refunded/defeased.

https://emma.msrb.org/Security/Details/?id=214183MX0

I picked mine up between March 2018 and May 2019 at prices of 62.8-68.7 giving YTM of 3.59%-4.13%. Current "value" on them is 83.475.

I also hold a couple that are long term because they were so "cheap" to purchase:

906347UT4 - Union Cnty, NJ AAA 12/1/2047, purchased Sept 2019 and May 2020 for 25.1 (YTM=4.99%) and 25.3 (YTM=5.07%), callable Dec 2025 at 30.947 for YTC=3.27% and 3.75%:
https://emma.msrb.org/Security/Details/?id=906347UT4

3464242V5 - Forney, TX AA 8/15/2040, GO purchased Dec 2019 for 28.62 (YTM=6.14%), callable August 2024 at 32.496 for YTC=2.67%:
https://emma.msrb.org/Security/Details/?id=3464242V5

The above are all taxable, while the following is tax free:
3464242N3 - Forney, TX AA 8/15/2048, insured GO purchased 4 weeks ago for 18.89 giving YTM=5.98%, callable August 2024 at 20.326 for YTC=1.63%:
https://emma.msrb.org/Security/Details/?id=3464242N3

[COcheesehead]

I only have one zero muni. It matures in September. Bought it in 2003. My tax free return was about 4.5% per year, but considering that was the great bull market in bonds over that time frame...like kissing my sister.

[brewer12345]

Finally found something to buy, a AAA-rated WV muni maturing 5/1/21 with YTM of 1.18%. No idea why the 25 bonds were priced that way, but not complaining. Would prefer to stay a little shorter, but with the credit quality of the issue and the paucity of yield available I was OK with it.

[jazz4cash]

I have passed on the zero munis due to lack of understanding of the de minimums rules. Another task on my learning curve.

[njhowie]

Quote:

Originally Posted by brewer12345 finally found something to buy, a aaa-rated wv muni maturing 5/1/21 with ytm of 1.18%. No idea why the 25 bonds were priced that way, but not complaining. Would prefer to stay a little shorter, but with the credit quality of the issue and the paucity of yield available i was ok with it.

cusip?

[brewer12345]

Quote:

Originally Posted by njhowie cusip?

95662my87

[njhowie]

Quote:

Originally Posted by brewer12345 95662my87

Dealer ripped the face off the seller he took the bonds from at 99.92, marked them up a little, and you got the benefit.

Good deal.

[brewer12345]

Quote:

Originally Posted by njhowie Dealer ripped the face off the seller he took the bonds from at 99.92, marked them up a little, and you got the benefit. Good deal.

I get the impression that happens every time I buy these days. I am a bottom fishing liquidity provider.

[njhowie]

Quote:

Originally Posted by brewer12345 I get the impression that happens every time I buy these days. I am a bottom fishing liquidity provider.

It seems you've found your calling - you'll need a new nickname - maybe "Fed Jr." or "Baby Fed" or "Mini Fed".

[Mr._Graybeard]

With the maturity date on those WVa bonds not far off, this probably doesn't matter, but I've found housing bonds to be vulnerable to early calls. Most of the ones I find have some provision that permits calls very quickly after their issue. Single-family mortgage bonds are at the top of the list. I have a couple, and the ones I've bought had a very small price premium and are multifamily. Even then I got a partial call.

[brewer12345]

Quote:

Originally Posted by Mr._Graybeard With the maturity date on those WVa bonds not far off, this probably doesn't matter, but I've found housing bonds to be vulnerable to early calls. Most of the ones I find have some provision that permits calls very quickly after their issue. Single-family mortgage bonds are at the top of the list. I have a couple, and the ones I've bought had a very small price premium and are multifamily. Even then I got a partial call.

Understood. Given the short maturity and small premium, I am not real concerned.

[jazz4cash]

Quote:

Originally Posted by Mr._Graybeard With the maturity date on those WVa bonds not far off, this probably doesn't matter, but I've found housing bonds to be vulnerable to early calls. Most of the ones I find have some provision that permits calls very quickly after their issue. Single-family mortgage bonds are at the top of the list. I have a couple, and the ones I've bought had a very small price premium and are multifamily. Even then I got a partial call.

When you say “early calls” is that something other than the listed next call date, like an extraordinary redemption or some obscure provision in the offering notice?

My multi family muni is up double digits since I bought it in April. Not thinking Of selling though.

[Mr._Graybeard]

Quote:

Originally Posted by jazz4cash When you say “early calls” is that something other than the listed next call date, like an extraordinary redemption or some obscure provision in the offering notice? My multi family muni is up double digits since I bought it in April. Not thinking Of selling though.

Yes, extraordinary redemptions may be permitted with 5 or even zero days notice on some bonds. I think I've actually had two partial calls of $5K each on my $50K multifamily housing bond.

[jazz4cash]

OK, thanks. I generally check for things like extraordinary redemptions but I can't dissect all the details within the offering notice like some of you do, at least not yet.

[njhowie]

Just remember that this is most always the case with public housing bonds that are issued by city/state - not private development projects masquerading in the muni space.