March 4, 2008
From the S&A Digest:
Finally, an opportunity for investors who don't want to dig through mountains of public filings, or gamble on a leveraged financial company, or try to guess how many bad loans a company might be holding...
Imminent downgrades for bond insurers, failures in the auction-rate securities market, and a general fear of what will happen to the $2.6 trillion of insured municipal bonds are creating fat yields for investors.
Municipal bonds usually trade at a 20% discount to Treasury-bill yields because they are tax-free. Now 10-year AAA munis are yielding more than 4.1%, a record 25% premium to Treasury yields. Many of these bonds, though they're rated AAA due to bond-insurance guarantees, would still be investment grade – and well worth buying – without the bond insurance.
I will be looking into some of these the next few days. Just FYI.
Pete
|
|