Quote:
Originally Posted by garyseitz
My CD'S are drawing on average 1.4%.
Money market .85%
My 30 year mortgage is fixed at 4%
And my bond interest is 6.125%
The default risk on these bonds must be greater than I would have thought.
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You are being snarky aren't you? Have you seen an open market when these bonds were issued? Rate set by the issuer, bonds purchased by whomever, paid for by homeowners and income tax free to the recipient. I don't know what the rate would be in a competitively bid market and perhaps the rate of 6.125 tax free is fair but it is interesting that the taxable yield on junk bonds is about 6-7% right now which would translate to about 4% after taxes, so these bonds are worse than typical junk bonds, hardly. Rates for municipal bonds today:
10 year bond A rated 3.90, 20 year 4.85 30 yr 5.05
10 year bond AA rated 3.15, 20 yr 4.45, 30 yr 4.80
Now these bonds were issued when rates were likely somewhat higher, but I don't know what the rate on the new bonds being issued for the new developments might be. Anyone know if there is a public market for the bonds at the time of issue?