Municipal Bonds -- the next shoe to drop

The credit crisis has taken its toll on many sectors. The municipal bond market has remained largely unscathed to date. But municipal investors need to open their eyes. These bonds are about to be the next shoe to drop in the credit markets.

The credit crisis has taken its toll on many sectors.  The municipal bond market has remained largely unscathed to date.  But municipal investors need to open their eyes.

Tax revenues are declining, operations are strained and municipal governments and agencies are facing real and serious challenges.  And, no one is paying attention -- neither the investment community nor the municipalities.  In fact, in last Sunday's New York Time, Gretchen Morgenson published an amazing piece on the total lack of transparency throughout the municipal bond market.  Municipal bonds are about to be the next crisis in the credit market.  Read the article: http://www.nytimes.com/2008/08/31/business/31gret.html

 

Sol Nasisi
Sol Nasisi: Sol Nasisi is the co-founder and a past president of BestCashCow, an online resource for comprehensive bank rate information. In this capacity, he closely followed rate trends for all savings-related and loan products and the impact of rate fluctuations on the economy. He specifically focused on how rates impact consumers' ability to borrow and save. He also has authored a wee

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Comments

  • BERCHTA DALE

    September 04, 2008

    Out of many methods you can invest your money Municipal Bonds happen to be one of the famous. However when you invest in Municipal Bonds you have to be aware of municipal bond rates too. Municipal bonds rating indicate the merit of municipal bonds which depends on whether the bond is backed by the full faith, credit, and taxing powers of the municipality or by revenues generated by the municipal facility the bond issue finances. Consider issuer-specific information such as the wealth of the community, characteristic of the issuer, revenue stream of the project the bond is used to fund. By examining the municipal bond, you can see if it should have high ratings or low based on the factors above.

  • JRodgers

    September 04, 2008

    I agree that this could be the next step down in the credit crisis. What surprises me is that while the risk is increasing, we are seeing strength in the monoline insurers that have the most to lose here.

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