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Old 06-21-2022, 12:32 PM   #841
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Quote:
Originally Posted by njhowie View Post
Personally, if the yield is right, I have no problem purchasing a tax free muni in my IRA. It's all relative. If the tax free is better quality, maybe comes with insurance, if the yield is close or better than similar maturity taxable, doesn't bother me, I'll buy it in the IRA.

Now, for this particular bond you've identified, it is taxable as COcheesehead indicates. But, be aware, the most you're going to collect is 4.836% (at current best offer of 104.07). Be aware that it has mandatory sinking fund redemptions of about 1/3 in July 2023, and another 1/3 in July 2024. If yours get redeemed on either of those dates, your yield (to redemption) is going to be lower than 4.836%. Apply a little statistics, and you can calculate your expected yield to redemption based on the probability yours is called on the 2023 or 2024 dates, or goes to maturity. I come up with about 3.74%.

I wouldn't jump at this issue. There's nothing wrong with it, but you should be prepared that you might only get 2.25% (at the current 104.07 best offer) if it gets redeemed next July.
Ugh! Too late!

Should have waited on your response.

I was not aware of the impact of mandatory sinking fund redemption. It is listed on the TDA Advanced search. I have modified my selection criteria to exclude "Sinking Fund". See list below (not sure how to paste a screenshot). Should I "Exclude" all of the listed constraints?

The reality is that I have been sitting on way too much cash in my t-IRA for a long time. If it gets called next July then at least I will earn > 0$.

I am willing to learn. Have plenty of time on my hands. I hope that I can use Muni Bonds to generate yield during these rough times.

*************************Include Exclude None
General Obligation
Build America Bonds (BABs)
Green Bonds
Escrowed To Maturity
Sinking Fund
Extraordinary Redemption
Insured
Revenue
Taxable
Bank Qualified
Callable
Subject To AMT
Putable
Pre-Refunded
Zero Coupon

I'm a little gunshy now. What search can I use that will allow me to prevent stepping on a land mine?
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Old 06-21-2022, 01:09 PM   #842
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Join Date: Mar 2012
Posts: 2,893
Quote:
Originally Posted by Born2Fish View Post
Ugh! Too late!

Should have waited on your response.

I was not aware of the impact of mandatory sinking fund redemption. It is listed on the TDA Advanced search. I have modified my selection criteria to exclude "Sinking Fund". See list below (not sure how to paste a screenshot). Should I "Exclude" all of the listed constraints?

The reality is that I have been sitting on way too much cash in my t-IRA for a long time. If it gets called next July then at least I will earn > 0$.

I am willing to learn. Have plenty of time on my hands. I hope that I can use Muni Bonds to generate yield during these rough times.

*************************Include Exclude None
General Obligation
Build America Bonds (BABs)
Green Bonds
Escrowed To Maturity
Sinking Fund
Extraordinary Redemption
Insured
Revenue
Taxable
Bank Qualified
Callable
Subject To AMT
Putable
Pre-Refunded
Zero Coupon

I'm a little gunshy now. What search can I use that will allow me to prevent stepping on a land mine?
You shouldn't be gunshy - you have to get your hands dirty to learn, that's the only way it happens. With this muni you bought, regardless of the outcome, you will not lose - guaranteed. 3 years is also short-term in my view, so it is good for learning.

There is no search that will prevent you from stepping in a landmine - you have to dig in and read the official statement, review the continuing disclosure documents, and so forth. The problem with queries is that it is going to be dependent on the brokers info - and there is some disclaimer that they are not responsible for any mistakes.

However, once again, it is almost impossible for you to get yourself in to major trouble with munis - the risk is simply not there. You bought an A-rated insured issue. You can sleep well at night and not even think about it. It's going to pay and will not default.

Don't be gunshy. Be happy - you bought your first one. Keep digging. You'll do fine.
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Old 06-21-2022, 01:20 PM   #843
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Quote:
Originally Posted by njhowie View Post
You shouldn't be gunshy - you have to get your hands dirty to learn, that's the only way it happens. With this muni you bought, regardless of the outcome, you will not lose - guaranteed. 3 years is also short-term in my view, so it is good for learning.

There is no search that will prevent you from stepping in a landmine - you have to dig in and read the official statement, review the continuing disclosure documents, and so forth. The problem with queries is that it is going to be dependent on the brokers info - and there is some disclaimer that they are not responsible for any mistakes.

However, once again, it is almost impossible for you to get yourself in to major trouble with munis - the risk is simply not there. You bought an A-rated insured issue. You can sleep well at night and not even think about it. It's going to pay and will not default.

Don't be gunshy. Be happy - you bought your first one. Keep digging. You'll do fine.
Thanks.

Throughout my professional life I have discovered that people who don't make mistakes don't really do much of anything. I tend to own up to any mistakes and look at it as a learning event.

All good!
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Old 06-21-2022, 03:00 PM   #844
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I started buying bonds in earnest in 2015. You learn a lot by doing. The good thing about bonds, at least the muni’s I’ve bought, is it’s hard to really screw yourself unless you panic and do something stupid.
I have been starting to flip more of my bond portfolio. The low yielders that I have had for a few years are being sold and replaced with higher yield. I virtually doubled my ladder yield since March.
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Old 06-22-2022, 07:21 AM   #845
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Thanks.

Throughout my professional life I have discovered that people who don't make mistakes don't really do much of anything. I tend to own up to any mistakes and look at it as a learning event.

All good!
Let me give you an even less risky approach while just starting out with searches you can set up. It's how I first got started with munis, because I didn't know much about munis and wasn't willing to take any risk at the time.

Look in the search options TD gives you - select the radio buttons for Include Escrowed to Maturity and Pre-Refunded and none others. Don't exclude any.

These are both 100% guaranteed - money has been set aside to cover all interest and principal payments on the bonds that come back in the search. Yields will generally be lower, however, that is the price for absolutely no risk. You do still have to investigate a little, as there may still be sinking fund redemptions if the call/redemption date is a ways out. Focus on Yield to Worst - sort from high to low. You can feel confident in purchasing the one at the top of the list, regardless of the rating.
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Old 06-22-2022, 08:07 AM   #846
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Quote:
Originally Posted by njhowie View Post
Let me give you an even less risky approach while just starting out with searches you can set up. It's how I first got started with munis, because I didn't know much about munis and wasn't willing to take any risk at the time.

Look in the search options TD gives you - select the radio buttons for Include Escrowed to Maturity and Pre-Refunded and none others. Don't exclude any.

These are both 100% guaranteed - money has been set aside to cover all interest and principal payments on the bonds that come back in the search. Yields will generally be lower, however, that is the price for absolutely no risk. You do still have to investigate a little, as there may still be sinking fund redemptions if the call/redemption date is a ways out. Focus on Yield to Worst - sort from high to low. You can feel confident in purchasing the one at the top of the list, regardless of the rating.
I tried at Vanguard. If I check both I get nothing. If I just turn on Prefunded but leave Escrow off I get two. 072024WH1 and 392274W28. If I turn on escrowed but no pre funded I get 48 of them.
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Old 06-22-2022, 11:47 AM   #847
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I tried at Vanguard. If I check both I get nothing. If I just turn on Prefunded but leave Escrow off I get two. 072024WH1 and 392274W28. If I turn on escrowed but no pre funded I get 48 of them.
Ok, so it sounds like you need to do them individually.

You can verify that those bonds fit the criteria by confirming against EMMA:

https://emma.msrb.org/P21527651-P21181191-P21598502.pdf
https://emma.msrb.org/P31431946-P31112612-P31523547.pdf
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Old Yesterday, 08:21 AM   #848
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I noticed the same on rates yesterday - they pulled back, again with 10-year treasury looking as if it wants to head for 3.0% over the next few weeks.
And just 5 days later, here we are...10-year at 3.02% and continuing lower with the market moving towards acceptance that a recession is on the horizon.
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Old Yesterday, 08:47 AM   #849
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And just 5 days later, here we are...10-year at 3.02% and continuing lower with the market moving towards acceptance that a recession is on the horizon.
Beyond just "that's the market". Why is this happening? Is this basically we have priced in a fed funds rate of 3.8-4.0% and it will take something outside that to move further up? This also seems to be positively affecting muni prices, at least a couple funds I have tickers set on are up again.
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Old Yesterday, 09:00 AM   #850
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Beyond just "that's the market". Why is this happening? Is this basically we have priced in a fed funds rate of 3.8-4.0% and it will take something outside that to move further up? This also seems to be positively affecting muni prices, at least a couple funds I have tickers set on are up again.
Powell/Yellen acknowledges recession has possibility/probability of happening - most others have come to accept that a recession is guaranteed. Market does not believe rates will continue to be raised in a recessionary environment, but lowered.

Of course muni prices will move up with treasury yields going lower.
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Old Yesterday, 09:24 AM   #851
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I guess wild card is we enter recession (probably already in one) but inflation remains high and Fed continues to raise rates regardless. With such low unemployment GDP contracts but if most people are employed they won't notice a technical recession at the street level. Continued inflation though, they will notice.
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Old Yesterday, 09:49 AM   #852
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I guess wild card is we enter recession (probably already in one) but inflation remains high and Fed continues to raise rates regardless. With such low unemployment GDP contracts but if most people are employed they won't notice a technical recession at the street level. Continued inflation though, they will notice.
If that's the case, then we will go deeper into recession for a prolonged period rather than making progress to come out of it in short order. That brings a bunch of potentially dangerous outcomes. So, now they are acknowledging that there's likely no "soft landing". Will it just be a bumpy landing? Or a crash landing?
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Old Yesterday, 10:56 AM   #853
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My platform, tear the bandaid off. Let's assume crash landing. Real estate continues to go down, unemployment up, stock falls further on disappointing GDP etc. This all keeps treasury yields lower despite what may become a further flight to safety as rates will not be raised further in this scenario?

Unless the inflation is thru roof and a Volker move is necessary. Trying to stay with theme of this thread and general fixed income commentary not necessarily arguing for a specific scenario per se.
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Old Yesterday, 12:06 PM   #854
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I used the last of my cash allocated to my ladder earlier this week. Bought 20, 2029, 4.4% double tax free muni’s.
I doubled the yield of my ladder since March. I have $25,000 maturing next month and about $130,000 more maturing into Fall. Yields might be higher then, but I sorta doubt it. I might be very happy with what I have, locking in some of these higher yields under 10 years.
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Old Yesterday, 12:09 PM   #855
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Nice work, tax free 4.4% low risk is a strong move regardless of a few tenths one way or the other.
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Old Yesterday, 12:16 PM   #856
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Anything unique about Federal Farm Cr Bks per se?

31331KN71, 8 year, Coupon 3.7, YTW 3.606. Not double tax exempt I get but state which for me is 5%.

I can't imagine default risk is anything to worry about barring Armageddon.
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Old Yesterday, 05:08 PM   #857
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How does this one look?

CHICAGO ILL PUB BLDG COMMN BLDG REV REF BDS

CUSIP:

167664ZS3
5.250% 03/01/2031

Buy
Bond Calculator
TEY Calculator
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Set Alert
S&P Research Report now available!
MASS/RAPID TRAN LEASE-RENT ALL BONDS Ser 2006, Non Callable

Bond Details

Bond Details

State

IL

Insurance

AMBAC


Type

N/A

Call Sched

N/A


Dated Date

10-25-2006

Tax Status

Tax Exempt


Delivery

EMMA Disclosure
EMMA Trade Activity

Book Entry

Ratings

A2/A+/---
S&P Report
S&P News
MuniPoints


Org. Maturity

03-01-2031

Maturity

03-01-2031


Material Events


MOODY RATING UPGRADE, EFF 05.04.2022 FROM A3 TO A2, 05-10-2022

Coupon & Yield

Coupon

5.250

Pay Months

Mar, Sep

Current Yield

4.675


Frequency

Semi-Annually

First Coupon

03-01-2007

Yield to Maturity

3.587


Yield to Worst

3.587

Depth of Market
Quantity (M) Min Inc MBR Price YTM YTW
15 15 5 10 112.298 3.587 3.587
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Old Yesterday, 06:32 PM   #858
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If you're happy with that tax free yield, then it's fine. Transportation systems are generally good, and this is an insured issue, so even better.

If you do go for it, and your broker provides for it, bid below the ask. You can see that the dealer offering 15 bonds for 112.198 paid 109.5 two days ago. I would bid 111.0 and let it sit out there for a while and see if he budges and lowers that ask...or interest rates rise during the day and he voluntarily lowers his ask.

With rent revenue bonds, you need to read through the offering statement and the section on Security for the Bonds. Though these types of bonds are generally strong, with the municipality/issuer paying the rent, it's usually appropriated annually as part of the budget. Many times there is some statement that there is not a requirement or obligation to appropriate the funds - it's a "moral obligation". I shy away from any bonds which contain clauses like that, no matter how highly rated they may be. Also, with rent revenue bonds, they usually say something that it's a lease that renews annually, and the municipality may not renew at any time if they don't want to...I won't buy any of those either. This one you've chosen is a good one, as it specifically says:

Quote:
As long as any of the Bonds, the Series 2003 Bonds or any Additional Bonds are outstanding, the Lease is noncancellable by the CTA and the Commission. Payments shall be made by the CTA on a net basis without deduction, abatement or setoff for any reason or cause whatsoever. The obligation of the CTA to make Lease Payments is unconditional, and is a general obligation of the CTA payable from any lawfully available funds of the CTA. The CTA covenants in the Lease to annually budget and program for the payment of Rent. The CTA will remain obligated to make all Lease Payments regardless of whether the Leased Property is acquired, constructed, improved and rehabilitated and regardless of whether the Leased Property is damaged or destroyed or otherwise not useful for CTA purpose.
This is about as strong a statement/covenant as you can get. The word "unconditional" is what you like to see, and it is here.
Attached Images
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Old Today, 02:53 PM   #859
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Been buying small chunks of brokered CD's. I don't have a long history with them but see my first "STEP" available.

Cusip 46593LCG2, 5 year. Matures 7/2027, callable.

Date Coupon
07/15/2022 3.35
07/15/2024 3.75
07/15/2026 4.25

So I assume you get the rate above until change date. So 3.35% till 7/24, then 2 years at 3.75, and for final year 7/26 - 7/27 4.25%.

Just thought it was interesting.
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