Disclaimer: Picture above was generated by X's "Grok 3 Beta" and is not an official picture of the "Municipal Authority of Westmoreland County" (Westmoreland County Pennsylvania) The picture is merely for illustrative purposes, hence the incorrect spelling of "call option", the official statement can be found at https://emma.msrb.org/P21898371-P21451775-P21899630.pdf
MuniBonds delivered
positive returns in February for the second consecutive month, surpassing
January’s performance. The Bloomberg Municipal Bond Index (LMBITR) gained
0.99%, marking the second-best February in the past decade and exceeding last
year’s February return by 86 basis points. However, MuniBonds underperformed
Treasuries by 117 basis points and investment-grade corporate bonds by 105
basis points. February’s gains boosted year-to-date returns to 1.50%, up from
0.50% in January.
Every U.S. state and
territory index posted gains, with California contributing the most, returning
1.11%. The 10-year and 15-year municipal bond indexes led performance across
the yield curve, each returning 1.19%, while the 1-year muni bond index had the
weakest performance at 0.42%. Among credit ratings, BBB-rated municipal bonds
saw the highest returns at 1.03%.
The
value (think more yield without downgrading in quality) remains in the new issuance
market. In comparison, the yields being offered in the secondary market are priced
high and thus much lower yield. Getting this “priced to sell” new MuniBonds is
laborious but it is a rewarding process.
February 2025 New Issuance
Purchases:
(here are some of the new bonds we purchased for our clients in February 2025)
Westmoreland PA Water and Sewer
5% Coupon
4.38% yield to 2033 call
AA rated, Assured Guaranty insured
Lancaster PA School District
5% Coupon
4.13% yield to 2033 call
AA rated, BAM Insured
Pennsylvania Turnpike
5.25% Coupon
4.24% yield to 2035 call
AA-
Toledo City School District
5.0% Coupon
4.31%yield to 2035 Call
Aa1 Moody’s, AA+
Arizona Single Family Housing
4.70% Coupon issued at par (100)
2055 Maturity, 2033 call
AAA-Rated
For an investor in the highest federal tax bracket, the TEY (Tax Equivalent Yield) for these MuniBonds would be well above 7%. An investor would have to earn at least 7% pre-tax on a corporate or treasury bond to earn more than these Munis.
In other words, if the investor is a high-earner and is earning less than 7% on their "stay rich" capital, why are they not investing in Municipal Bonds?
#MuniBonds #MuniBond #munis #WatkinsonMuniBonds #GetRealStayRich #MunicipalBonds #TBILLNCHILL #WatkinsonMunicipalBonds #InGodWeTrust #InGodWeTrustWatkinson #IGWTWatkinson