Are we headed for massive muni defaults? At this point anything’s possible. My guess (and money) is that the answer’s no (on high-quality, which are additionally insured, issues). At this point, though…what would really, really shock you??

[quote=YHWY]Are we headed for massive muni defaults? At this point anything’s possible. My guess (and money) is that the answer’s no (on high-quality, which are additionally insured, issues). At this point, though…what would really, really shock you??
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Do you tell your clients about the “inherent risk of default” of the insurers?

ABSOLUTELY!

In fact, hank, the scenario I always use is, "If the City, County and State of NY went bankrupt, do you honestly think MBIA (or whichever insurer) could cover that obligation?"
It makes a couple points simultaneously.

[quote=YHWY]In fact, hank, the scenario I always use is, "If the City, County and State of NY went bankrupt, do you honestly think MBIA (or whichever insurer) could cover that obligation?"
It makes a couple points simultaneously.

[/quote]

It means that the only time that you would need the insurance, it won’t be there. Also, since the insurance won’t cover you, you’re a sucker if you forgo a higher rate in order to fall for the insurance gimmick.

Are those the points that you were thinking of?

The points are that if the client really believes that a highly rated muni from the city, county or state of NY carries a legitimate default risk, that A) Yes, the insurance probably won’t be there and B) If you really don’t believe that there’s a legitimate default risk, that we may, in fact want to choose a highly rated non-insured bond for a hiugher yield C) That if they do believe there is legitimate default risk and just want the insurance to “feel better” that that isn’t a realistic point of view (as my scenario illustrated) and D) If they honestly believe that the risk of default of both the municipality and insurer, then we need to be looking for a more conservative investment for him or her. I know having investment alternatives flies in the face of everything you believe, but there you have it.

[quote=YHWY]The points are that if the client really believes that a highly rated muni from the city, county or state of NY carries a legitimate default risk, that A) Yes, the insurance probably won’t be there and B) If you really don’t believe that there’s a legitimate default risk, that we may, in fact want to choose a highly rated non-insured bond for a hiugher yield C) That if they do believe there is legitimate default risk and just want the insurance to “feel better” that that isn’t a realistic point of view (as my scenario illustrated) and D) If they honestly believe that the risk of default of both the municipality and insurer, then we need to be looking for a more conservative investment for him or her. I know having investment alternatives flies in the face of everything you believe, but there you have it.

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I own you, broker010.

Give me a fucking break, Bobby. Go sell an annuity or start a Regrep forum or something. You are making a fool of yourself here. Your retort is EXACTLY par for the course when you’ve been hammered. Call a name, type nonsense or say “none of your business”. You have no knowledge, just sales ability, good for you. Bad for your clients.

default rate for AAA munis over the past 10 years is >1%

Greater than 1% or Less than 1%?

Less than 1%…

Oh, and Bobby, if you’d like to discuss your “ownership” claim further, I’m happy to give you my name, address and phone number so we can discuss it in more detail.

People sure are testy these days! Maybe it has something to do with equities off 50% in a year and nothing working other than cash. This too will pass (the market correction, not brokers getting chippy).

Guilty as charged, obviously. Man, GG, you couldn’t have picked a more innocuous topic…one would have thought.
 

I have been comfortable buying Quality school and sewer types.  I do not expect to have credit problems but sure do look more carefully at the issues before buying them. Yields are very good and brackets will rise in the future and you will like them even more. If we have problems with these going forward then things went from very bad to worse. Also, not afraid of a little duration here.

I think I could start a thread called “Thanksgiving” and within minutes the indy and wirehouse guys would be at each others’ throats.

I still strongly believe there’s value in the muni market. I’ve been using them quite a bit over the past few months. I’ve always thought that municipalities (for the most part) represent one off the more stable issuers of any bonds, just by nature of their structures. Obviously, specific revenue bonds tied to stand-alone projects can be more dicey.

I love GO bonds... two things we can count on; death and taxes...

try .001% for high yield munis, the default rate for single A and higher is nil. Give me a break , two years from now we’ll be heros for putting our clients in munis.