[784caroline]

Has anyone attended these seminars for 7% municipal bonds as advertised in the Village Daily Sun...and better yet has anyone bought any of these bonds?

I know the bonds may be NR or A- ratings and for 30 years but what else should i be concerned with!! I would think people would be buying these bonds left and right especially in this market.

What am I missing!

[villages07]

Caroline,

I did go to a Lawson Financial seminar one day. They and FMS bonds seem to be the two outfits that advertise the most locally. Both have websites where you can browse their current bond offerings.

They seem to deal in the resale market for bonds. Take the Villages CDD bonds for example...when they are originally issued mostly hedge funds and institutional investors (not you and me) scooped them up. With recent economic problems, investors have made requests to cash out of some accounts so the hedge funds, etc had to sell bonds to pay off investors. Companies like Lawson and FMS buy these resales then, in turn, sell them to individuals. I am no muni bond expert, by any means.

I did recently buy some resale CDD5 Villages bonds from FMS .... 6.5% yield, mature in 2033 (issued in 2003) but callable in 2013. Tax free munis. These are the infrastructure bonds that go with the house, not the amenity/recreation bonds that the IRS is investigating.

If you look at the two company websites, you'll see a variety of offerings from near term maturities in the 4-5% range, to 30 year plus maturities for lower rated offerings at reduced coupon prices that now yield over 7%...but, are riskier. I consider the Villages CDD bonds a pretty safe investment but would shy away from many of the other offerings they have. Also, they seem to rarely have the Villages bonds...when they get them, they get sold out pretty quickly.

So, if you are interested, go to Lawson's seminar...it was informative and you'll get a free meal. There was no pressure by the reps.

www.fmsbonds.com

www.lawsonfinancial.com

Look for bond offering links on both sites.

[784caroline]

Thanks for your input on Lawson and the BONDS they advertise. I am surpirsed that more people have not particiapted in these seminars.

Regarding the CDD bonds for infrastructure...what should I ask for to get these bonds as opposed to getting the amenity bonds..for I have been thinking about these for some time!

______________________________________
The Villages, formerly from N VA (DC suburbs)

[villages07]

Caroline....they are usually clearly labeled in their bond offering list. Mine actually said CDD5 in the list;

I have not yet seen any of the recreation/amenity bonds popup for resale so don't know how they are labeled.

There is a 3rd flavor of bond.... the water authority issues bonds too; these are also tax free muni and 'guaranteed' for repayment by our water fees. I saw these pop up once...again, clearly labeled.

In my uneducated opinion, FMS seems to have more bond offerings than Lawson but best to monitor both. You could also proactivley contact each firm and have an account rep alert you when they get villages CDD bonds to sell.

The seminar I went to was well attended....probably 50+ people; but after about 30 mins most of them were itching to get to the buffet at Golden Corral, so, the number of serious attendees was probably less than half. The rest could have been professional seminar goers. Free lunch!!!

[iaudit]

Villages07

What, if any fees, are there involved with buying these bonds? I looked on the websites but saw no information on fees.

[villages07]

iaudit,

for FMS (I can't speak to Lawson), there were no additional fees to buy the bonds. I'm sure they made their $$ by buying them at a price lower than they are selling for. My CDD5 bonds were purchased at 100, par value. Now, whether FMS paid 97 or 90 or 99 for them I don't know.

The only additional was I had to pay whatever interest had accrued since last dividend date and I would get that back on the next dividend date. These bonds pay on May 1 and Nov 1.

[KathieI]

As usual, 07,
your explanations are

[784caroline]

Villages07 and Others

These bonds were in todays paper listed at 6.33%...A+ rated

Villages07 what do you know or understand about the Sinking Fund that is associated with these bonds????

[villages07]

784....

Yep I saw those...looks like the same ones I bought except the price is now 102 so the yield to maturity is 6.33 vis 6.5. However, when I look at fmsbonds.com, these villages CDD bonds are not listed in their current offerings.

I'm not sure what you mean by sinking fund. Our CDDs make bond payments to bond holders/brokers every May 1/nov 1 using collections from property tax payments and proceeds from homeowners doing early bond payoff.

As an aside, bonds on recent new home purchases were issued at 5 3/8% to reflect a better interest rate environment than the CDD5 bonds issued in 2003 at 6.5%.

[784caroline]

Villages 07
The way I understand it as a result of early payoff by residents the CDD's are able to pay off the bonds early and they are "Auctioned off" as to which bonds will be redeemed. This is in addition to the call feature. Obviously I dont have a 100% grasp of the concept (you may want to google Bond Sinking Fund) but I do know "These" particular bonds do have a sinking fund feature in addition to the Call feature. This will not be a problem unless some of the bonds you hold are auctioned off during the first year which is unlikley. SO if you strated with $30K of bonds they amy call $5K in auction..you would get the $5K and now have $25 remaining.

Here is one definition of sinking fund
Sinking Fund
A bond with special funds set aside to retire the term bonds of a revenue issue each year according to a set schedule. Usually takes effect 15 years from date of issuance. Bonds are retired through either calls, open market purchases, or tenders.


You may want to check with your bond seller to see if your bonds have this sinking fund and how it woud or could effect your investment. Again its only bad if the auction occurs during the first year OR you are set i your ways and expect to be drawing 6.5% tax free and the auction occurs and you are force to find another investment for your money.

Another nice feature after talking to FMS is since the bond must be in street name with a registered broker, FMS will transfer , at no cost, the bond holding to any other broker where you have an account. That would eliminate having another account with holdings as well as a money market sweep account unless you wanted the semiannual payments sent to your house directly.

[784caroline]

Did a little more research an your broker should be able to tell you what the "Sinking fund" schedule is ....ie how many bonds will be called to support the sinking fund each year...and this is in addition to the call feature!!

[kg895388]

Muni bonds are a very good investment right now, but always remember that you still need to diversify among issuers.