Muni to open accts

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Oct 28, 2009 1:15 pm

Is it just me or are the muni rates terrible now too..

Oct 28, 2009 1:36 pm
Squash1:

Is it just me or are the muni rates terrible now too..

 
You're not imaging it---they've been unattractive for a while!
Oct 28, 2009 2:10 pm

10 year bonds can be had at 4.40% AAA insured?

Equiv to 7.2% loose taxable.

Many people would have loved to have earned 5-7% the last 10 years...

My 2c

I like 10 year zeros the best ; $60,000 +/- gets you $100,000.
Sell in 4-5 years at some sort of profit if you get bored

I don't care if rates skyrocket, just that the 60m goes to 100m

Oct 28, 2009 2:45 pm

As compared to when?  This time last year, yes.  We saw historic dips in bond prices and therefore incredible yields.  Those prices have corrected and now rates are back to "normal."  They're not stellar, but they're not awful either. 

 
In the last 10 years the average 20 Bond General Obligation Index yield is 4.925 (according to my handy Joogle) - so considering you can get some good bonds yielding better than 5% right now, I'd say rates aren't all that bad.    
Oct 28, 2009 2:56 pm
dashover:

10 year bonds can be had at 4.40% AAA insured?

Equiv to 7.2% loose taxable.

 
7.2% is the taxable equivalent of 4.4% tax free??? 
Oct 28, 2009 3:05 pm
3rdyrp2:
dashover:

10 year bonds can be had at 4.40% AAA insured?

Equiv to 7.2% loose taxable.

 
7.2% is the taxable equivalent of 4.4% tax free??? 
 
Sure, everyone's in the 40% tax bracket.
I would say 6.5% is more appropriate other than for HNW (high net income) individuals.
Oct 28, 2009 3:16 pm
dashover:

10 year bonds can be had at 4.40% AAA insured?

Equiv to 7.2% loose taxable.

Many people would have loved to have earned 5-7% the last 10 years...

My 2c

I like 10 year zeros the best ; $60,000 +/- gets you $100,000.
Sell in 4-5 years at some sort of profit if you get bored

I don't care if rates skyrocket, just that the 60m goes to 100m

 
You must have better inventories than I do.. I don't have many zero's yielding 4.4 with a maturity at 10 years..
Oct 28, 2009 4:58 pm

I can buy AA Torrence CA SD GO at 4.94%....8/1/19

 
Muni rates are cheap by historical standards and still exceed treasuries in many cases.  Pre 2008, munis tended to trade between 80%-95% of treasuries.  Occasionally you could find something at 100%+, but that was generally an odd credit or short call/long maturity combination.
 
And yes, buying a 10y and then swapping it out in 5yr is an excellent strategy.  Traders refer to it as rolling the curve.
 
When I have prospected with muni's I used the shortest 5% in state yield I could find.  Even if it was too long for the person on the other end of the line, it would get their attention and start the conversation.  I would emphasis the yield and the TEY to pique interest then explain details in responce to questions.
 
Still value to be found in Munis....
Oct 29, 2009 8:50 am
Squash1:
dashover:

10 year bonds can be had at 4.40% AAA insured?

Equiv to 7.2% loose taxable.

Many people would have loved to have earned 5-7% the last 10 years...

My 2c

I like 10 year zeros the best ; $60,000 +/- gets you $100,000.
Sell in 4-5 years at some sort of profit if you get bored

I don't care if rates skyrocket, just that the 60m goes to 100m

 
You must have better inventories than I do.. I don't have many zero's yielding 4.4 with a maturity at 10 years..
 
Squash---I don't know if you work for UBS, but UBS' inventories aren't that good right now. I normally buy alot of ny muni's, and the yields and prices are aweful. None of my NY clients are interested in paying a price that is too expensive and not getting decent yield in return. I have one guy who has bought alot of LI Pow zero's. They are nice bonds, but I don't want him overconcentrating in this issue. So there aren't many options out there right now.