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I have a municipal bond with a coupon of 5.75% that is callable in July of this year. There is 12 years until maturity. Does anyone have any experience with a bond being called, i.e, how much notice is required, if any. There has not been any material events issued to date. What is the likelihood of it being called given current interest rates? It's AAA rated.
I bought this new issue bond from a bond dealer directly. Does anyone know of an alternative for buying bonds? I know it's difficult for an individual investor to get new issues. Fidelity has a very small offering. I am not interested in bond funds.
I have a municipal bond with a coupon of 5.75% that is callable in July of this year.
There is 12 years until maturity.
Does anyone have any experience with...
Just ride that pony as long as you can and don't expect much notice.
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Does anyone know of an alternative for buying bonds?
Alternative to what?
Quote:
I know it's difficult for an individual investor to get new issues.
The various agencies work through specific brokers to sell their bonds.
Do some homework for who the agencies/counties in YOUR state have used. Start there.
Just ride that pony as long as you can and don't expect much notice.
Alternative to what?
Alternative to using a bond dealer vs. automated trading platform, i.e., FIdelity.
The various agencies work through specific brokers to sell their bonds.
Do some homework for who the agencies/counties in YOUR state have used. Start there.
Yes, I know how to do the homework as that is how I found the bond dealer for the new issue in my state. But, it was a matter of luck that I got in on this new issue.
Expect the bond to be called. Question: Did you pay more than par value for the bond?
I would buy a municipal bond mutual fund specific to your state. The fund managers get first crack at new bond offerings not usually available to individuals.
I have a municipal bond with a coupon of 5.75% that is callable in July of this year. There is 12 years until maturity. Does anyone have any experience with a bond being called, i.e, how much notice is required, if any. There has not been any material events issued to date. What is the likelihood of it being called given current interest rates? It's AAA rated.
I bought this new issue bond from a bond dealer directly. Does anyone know of an alternative for buying bonds? I know it's difficult for an individual investor to get new issues. Fidelity has a very small offering. I am not interested in bond funds.
There is little to no notice given, you have been "pre-notified" at purchase & it's your responsibility to monitor current muni rates (from the bond issuer's perspective).
If the current market rates are lower than the coupon, expect it to be called. PERIOD.
You can go through a broker/dealer instead of direct, that way you get some help in these circumstances.
Fidelity has the entire universe of offerings at their disposal for bonds, whether you want to pay the mark-up is a different story.
There is little to no notice given, you have been "pre-notified" at purchase & it's your responsibility to monitor current muni rates (from the bond issuer's perspective).
If the current market rates are lower than the coupon, expect it to be called. PERIOD.
You can go through a broker/dealer instead of direct, that way you get some help in these circumstances.
What help would that be?
Fidelity has the entire universe of offerings at their disposal for bonds, whether you want to pay the mark-up is a different story.
I do anticipate the bond being called based on current rates. I have set up alerts with Fidelity but haven't seen much in the way of new issues. I do know there has been a push for greater transparency for municipal bonds at the retail level by the MSRB and the EMMA website provides a calendar of new issues along with the bond dealer so I'm using this for now. The point of my post is to learn of other platforms for buying new issue bonds.
Location: Was Midvalley Oregon; Now Eastside Seattle area
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If the issuing municipality can issue new bonds at a lower coupon rate, your bond will be called. This bond seems to relatively high, which means the credit rating of the municipality is relatively low.
I do anticipate the bond being called based on current rates. I have set up alerts with Fidelity but haven't seen much in the way of new issues. I do know there has been a push for greater transparency for municipal bonds at the retail level by the MSRB and the EMMA website provides a calendar of new issues along with the bond dealer so I'm using this for now. The point of my post is to learn of other platforms for buying new issue bonds.
The most common method's will be through a B/D such as Schwab or TD. I mention these two b/c I know they charge $1/bond as the commission and/or "markup".
That's right, the notice comes after the bond is called. It is their right (usually, the way they issue the bond) to call it whenever they want to do it. That is a high interest muni, btw.
That's right, the notice comes after the bond is called. It is their right (usually, the way they issue the bond) to call it whenever they want to do it. That is a high interest muni, btw.
It was offered as a Build America Bond with a 35% interest subsidity by the Federal government about ten years ago. So, it's federally taxable but not subject to state tax. A twenty two year bond when purchased. Still a good rate for a AAA rated bond. I read the prospectus at purchase and its callable at par after July 1.
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