During the 2008-2021 low-rate environment, many in MuniLand
thought they would never again see 4% coupons trade at a discount, let alone a 5% coupon
MuniBonds trade at a discount.
During the Liberation Day volatility in April 2025 and
continuing into May, we have seen tremendously attractive entry points for the
highest graded Municipal Bonds.
For example, in mid-April, we purchased Lancaster County,
PA General Obligation (GO) for a PA resident.
The Bond slang is "Disco 5s of '55 to a 9-year call. A1/AA rated"
Translation to English:
5% Coupon with a 2055 maturity
A1/AA rated at 5.02% yield to a 2034 call, purchased at $99.68 or at a discount to par.
The TEY or Tax Equivalent Yield is 8.95% for
this Pennsylvania resident.
Compare this TEY of 8.95% to 8.4% which is the average
annual return of the S&P 500 over the last 20 years, from April 30, 2005,
to April 30, 2025, with dividends reinvested.
Buy the investment grade MuniBond with the nominal 5% yield and 9-10 years of
call protection.
Eliminate the volatility and the ensuing nausea from stock
volatility.
At least, lock in some of the gains from the stock market
(not that we are bearish), and diversify with predictable income and return of
principal in a tax-efficient manner.
#MuniBonds #MuniBond #Munis #WatkinsonMunicipalBonds #MunicipalBonds #GetRealStayRich #TBillandChill #MuniLand #MunicipalBonds #WatkinsonMuniBonds