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BAB's (build america bonds)

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Apr 27, 2009 5:27 am

    I was wondering what was going on with muni’s the last couple weeks, seeing such a nice rally in such a short period of time…  BAB’s (Build America Bonds) are such a good deal for municipalities, they will primarily be issuing taxable municipals until the end of 2010.  Jones got a few beautiful BAB’s las week.  This will be nice to balance out IRA’s with some different quality, good yielding bonds.  Imagine, AA rated school district GO’s compared to corporate A-rated bonds yielding about the same.  This disparity won’t last long.  Pick up BAB’s at these yields while you can.

    Also, This decline in tax-free municipal issuance will cause rates to decline even more.  Supply is going down and demand is moving up.  Buy soon or you'll have to pick up traditional muni's at .9 of treasuries once again.
Apr 27, 2009 7:51 pm

+1 on the BABs. Good stuff!

  These bonds are trading at a premium. The demand is huge. California's G.O.offering, the largest G.O. issue in muni history at 6 billion dollars. It was over subscribed.   As Ranks has noted the BABs will soak up supply. An issue that has been over hanging the market recently.   Munis still cheap. Credit spreads are still off the hook wide.
Apr 27, 2009 8:35 pm

May 20, 2009 3:55 am

Can you believe the rally we’ve seen in BAB’s?  I was hoping yields would remain high a little longer.  Guess not. Same rally with traditional muni’s.  This rally is absolutely mind-blowing.  I’m pissed because I’ve got around a million keyed up for some yields that just aren’t materializing.