California Munis

User Forum Topic
Submitted by HereWeGo on December 17, 2008 - 9:38am

General Obligation bonds (GOs) trading at yields of 5%+.

CUSIP 13063AQ49: Matures 4/18, non-callable, 5% coupon, trading at PAR or slightly below (I see a couple of 98 handles from yesterday.)

I doubt that inflation fears are the problem here. Yikes.

‹ When will the economy in the U.S. turn around? Pentagon Federal Credit Union ›
Trading up the last 3 weeks,
Submitted by oxfordrick on January 18, 2009 - 9:14am.

Trading up the last 3 weeks, last trade reported at
109.75. The worse the news, the higher the demand.

http://www.emma.msrb.org

30 year GOs also bid up about 12% this year, currently yielding 5.25%.

Given the current budget
Submitted by HereWeGo on January 18, 2009 - 3:21pm.

Given the current budget crisis, those trades seem exceptionally irrational. California is talking about paying debts in IOUs, for goodness sakes.

Current trading sentiment is
Submitted by oxfordrick on January 18, 2009 - 4:30pm.

Current trading sentiment is that President Obama is not going to start his Presidency with a default of the largest State.

Note that at 5.25% long Cal General Obligation bonds yield 180% of comparable treasuries. That's
pretty irrational too!

What is the downside of
Submitted by Raybyrnes on January 19, 2009 - 7:58am.

What is the downside of owning a MUNI bond fund as opposed to the individual bonds?

With individual bonds you
Submitted by oxfordrick on January 19, 2009 - 8:40am.

With individual bonds you have the opportunity to do your due diligence on a specific issue, mostly I hold State of California General Obligation Bonds.

With funds you are relying on the expertise of paid managers who may have incentives and motivations different from yours.