Muni Bond (and Muni Bond Fund) Discussion

[COcheesehead]

Notified of two calls Nov 1st. No biggie, lots of replacements now available.

 

[jazz4cash]

Received 2 calls plus a 50% sinking fund redemption this morning - redemption dates in 4 weeks.

This morning purchased AA-rated June 2040 2.892% coupon @ 57.75 (ask was 58.2) for 7.125% YTM, callable June 2030 for 11.25% YTC. Dealer had purchased for 55.56, so I gave him most of his desired profit...if YTM were lower, I would have played cat and mouse trying to get closer to 57, but I didn't want to risk someone jumping in and stealing it from under me.

Great buy. I’ll need to be more diligent in the coming weeks. I am seeing some better yields but avoiding going out that far (unless I can get over 7%!).

 

[jazz4cash]

I was looking at a county GO for my home state priced near par, AAA,2039 maturity, 4% coupon, 75 available, min buy of ten. I mostly have revenue issues from transit, school, and housing agencies. Now I’m favoring GOs and similar issues. These were all gone by the time I looked it over and decided to buy. Lesson learned. Need to learn how to move more quickly. Yields are moving up.

 

[njhowie]

I was looking at a county GO for my home state priced near par, AAA,2039 maturity, 4% coupon, 75 available, min buy of ten. I mostly have revenue issues from transit, school, and housing agencies. Now I’m favoring GOs and similar issues. These were all gone by the time I looked it over and decided to buy. Lesson learned. Need to learn how to move more quickly. Yields are moving up.

Yes, you learned a good lesson which I seem to repeat over and over trying to squeeze an extra $10 or $20 out of the dealer only to have someone else come along, pay the ask, and then I'm left high and dry.

However, in the current environment, the very high likelihood is that you'll have additional opportunity to pick up similar/better in the next month or two. Try to be patient - the sellers will come to you, it's still a buyers market here.

 

[perinova]

Just bought 9 year A+ rated non-callable/no sinking fund 7.597% YTM (2.73% coupon).

In this situation (YTM>coupon) are you going to incur taxable capital gain at maturity?

 

[njhowie]

In this situation (YTM>coupon) are you going to incur taxable capital gain at maturity?

No - in IRA.

 

[jazz4cash]

I bought the JP Morgan Chase issue 4812U7L7 8/31/21 which is currently down 9.47%. Should I be concerned? I expected it might drop from par, but not this much.

Revisiting this ‘market linked CD’ that uses a proprietary index. I wish I hadn’t bought it but I only nibbled. It’s down 17.5% per cent in 14 months. Guess I’ll dig into the prospectus to see if I can learn anything. Thoughts?

 

[COcheesehead]

Revisiting this ‘market linked CD’ that uses a proprietary index. I wish I hadn’t bought it but I only nibbled. It’s down 17.5% per cent in 14 months. Guess I’ll dig into the prospectus to see if I can learn anything. Thoughts?

I can’t even find this issue.

 

[jazz4cash]

I can’t even find this issue.

That’s because I typo’d the CUSIP. Should be 48128U7L7

 

[njhowie]

Revisiting this ‘market linked CD’ that uses a proprietary index. I wish I hadn’t bought it but I only nibbled. It’s down 17.5% per cent in 14 months. Guess I’ll dig into the prospectus to see if I can learn anything. Thoughts?

As I've mentioned, I've nibbled on all of them I've purchased. I've purchased 5 to 7 year maturities ranging from 2024 through 2029. There is absolutely nothing to be concerned about with any of these. As with any CD, it is FDIC insured and holding to maturity, in the absolute worst case you will receive 100 cents on the dollar.

I hold 21 of them. All of them down, as would be expected with the markets down as they have been since purchase. The 2029 issues I have from JP Morgan are down almost 27%. The ones I have from Goldman and Morgan Stanley with 2024 maturity are down between 9% and 13%, and as maturity approaches, I expect that they will trend back to 100.0.

As ugly as the current numbers appear, I'm actually ok with them - it was entirely the reason I purchased these; to have exposure to the markets but at the same time have absolutely no risk that at maturity I'm guaranteed to get all of my money back, no matter how the markets have performed.

If you need to calm yourself, go to the chart in the prospectus which show the payoff at maturity. The line for the return is never below 0%. On the left axis is Payment at Maturity, and on the bottom axis is Index Return. Anything where Index Return is negative, Payment at Maturity is $1000.

 

[jazz4cash]

Thanks. I am not worried. In fact maybe I am too calm considering the overall drop in equities.

 

[COcheesehead]

That’s because I typo’d the CUSIP. Should be 48128U7L7

It’s a zero coupon. It will come back to par at maturity, but you are paid nothing while you wait.

 

[53anddone]

I am patiently waiting to see some Muni's in the 5% area for YTW. Anyone else thinking they could go there? Illinois doesn't count.

 

[COcheesehead]

I’ve seen some on my bond screen. Lower grade, below par, low coupon stuff.

 

[COcheesehead]

I am patiently waiting to see some Muni's in the 5% area for YTW. Anyone else thinking they could go there? Illinois doesn't count.

I just ran a screen, I found 306 bonds above 5%.

 

[njhowie]

This afternoon picked up 7 year non-callable, no sinking fund for 7.19%.

Have maturity tomorrow so will be looking for more above 6% on Monday.

About 5% of the portfolio matures/redeems between now and year end, and then just over 25% the next two years, the bulk in the 2% to 3% range, so I'm really looking forward to increasing future cash flow.

 

[COcheesehead]

This afternoon picked up 7 year non-callable, no sinking fund for 7.19%.

Have maturity tomorrow so will be looking for more above 6% on Monday.

About 5% of the portfolio matures/redeems between now and year end, and then just over 25% the next two years, the bulk in the 2% to 3% range, so I'm really looking forward to increasing future cash flow.

Nice! I have about $170,000 maturing between tomorrow and Dec 15th. Giddy with the possibilities.

 

[njhowie]

Nice! I have about $170,000 maturing between tomorrow and Dec 15th. Giddy with the possibilities.

You'll have fun with that. I think we will have lots of opportunity the final two weeks of the year. Portfolio managers will be tossing lots of bonds window dressing their portfolios for year end, and lots of retail investors will be doing their tax loss harvesting, unloading bonds they can no longer stand seeing in their portfolio being down so much.

 

[COcheesehead]

You'll have fun with that. I think we will have lots of opportunity the final two weeks of the year. Portfolio managers will be tossing lots of bonds window dressing their portfolios for year end, and lots of retail investors will be doing their tax loss harvesting, unloading bonds they can no longer stand seeing in their portfolio being down so much.

Yep, +1.

 

[53anddone]

I just ran a screen, I found 306 bonds above 5%.

Yeah I see a lot of these too. 3% that are selling for $70 or something. I should have qualified and said 5%+ bonds that are selling for near par. I don't see any coupons in my state above 5% yet......

 

[njhowie]

Yeah I see a lot of these too. 3% that are selling for $70 or something. I should have qualified and said 5%+ bonds that are selling for near par. I don't see any coupons in my state above 5% yet......

You may be waiting a while for that as there likely hasn't been any/many tax free munis with 5% coupons issued in the past 10 to 15 years.

 

[53anddone]

You may be waiting a while for that as there likely hasn't been any/many tax free munis with 5% coupons issued in the past 10 to 15 years.

My search shows 255 coupons above 5.0% but none in my state (VT). Its a start though. I am curious what the market will bring after the next rate hike in November if anything.

 

[njhowie]

My search shows 255 coupons above 5.0% but none in my state (VT). Its a start though. I am curious what the market will bring after the next rate hike in November if anything.

I'd keep an eye on those then - try to look/think beyond home state. If you're looking at tax free munis, the biggest bang comes from the federal tax free nature. Of course if also within your home state, even better for the state tax benefit, but that won't have as much impact as the federal tax free.

I think everyone is watching and thinking about what happens after November. As I've always said - do what you will be comfortable with no matter what happens.

 

[COcheesehead]

My search shows 255 coupons above 5.0% but none in my state (VT). Its a start though. I am curious what the market will bring after the next rate hike in November if anything.

Coupons or yields? Two different things.

 

[53anddone]

Coupon. I buy based on yield (YTW/YTM) of course but would prefer higher coupon issuances at the moment. I can see a few states have coupons of 6% now.