Quick Question on muni bond funds

Discussion in 'Trading' started by KevR1025, Sep 24, 2008.

  1. KevR1025


    Hi Guys,

    Can anyone provide some insight on Muni Bond funds such as the Michigan Insured fund- MYM.

    Many of these funds have been hit hard and are yielding over 6%, with a tax equiavalent yield above 8%.

    Whats the catch? What am I not looking at?

  2. Ambac and MBIA insurance is worthless and the local governments might default in a bad economy.
  3. bidask


    i would like to know too if there are any reasons other than the troubles with municipal bond insurers.
  4. Daal


    liquidity has vanished for muni bonds so they are mispriced. problem is to get data to buy the ones that are unlikely to default
  5. KevR1025


    Thanks for the replies. I knew about MBIA and Ambac but in the last week yields have increased sharply on these funds. Must be because risk of default is much higher then?
  6. It becomes tougher to raise a myriad of taxes in this environment to pay off the bonds in a timely manner.