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Summer Article on Distressed Muni Bonds Has New Relevance (Happy New Year!)


BargainValueHunter
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The recent opening up of opportunities in the muni bond sector may lead value investors to begin their search for distressed muni debt gold.

 

This article from Forbes was written long before Whitney dropped a dime on this sector of the bond market on "60 Minutes".

 

Have a safe and prosperous New Year CoB&F readers!!  ;D

 

http://blogs.forbes.com/investor/2010/08/25/buffett-frets-over-municipals-so-should-you/?partner=yahootix

 

Another area muni bond fund investors should look for are how much in Florida, Arizona, California and Nevada community development bonds their fund owns. Bond funds were the major buyers of such bonds and their valuation is a big question mark since many don’t trade at all because the funds own them all. While such ‘dirt bonds’ have always been considered money good, since they are backed by land, past performance is no indication of the future.

 

In Florida, 73% (156 issues at last count) of all the CDD bond issues are in default and many of the projects will never get built. The state has stopped growing in population and may not resume for some time. Meanwhile, the amount of bond debt per building lot in many of these projects is too high to make them competitive against non-CDD developments.

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