Municipal Bonds

[TJ_98370]

I have some municipal bonds. They all pay 5% or better. They all took a hit in market value over the course of last month. Two of them depreciated at around 10%.
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Why is this happening? Does anyone understand what's going on in the municipal bond market?

[TJ_98370]

I think I found the answer to my question. Investors are questioning the security of municipal bonds now.


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Interest payments soar for cities and counties, some of which loaded up on complex derivative deals similar to ones that swamped many banks.
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[rose-colored-coolaid]

Does this have anything to do with the insurances underwriting these bonds? It seemed like last spring some of those insurers were shown to be at risk. Maybe the failure of AIG has reignited worries about bond insurance?

[TJ_98370]

RCC -
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I think declining market value of muni's has everything to do with the fact that AIG went under and news of other monolines being in trouble. That coupled with the apparent fact that many communities have been playing derivative games with interest payments, as mentioned in the linked article, is spooking investors.
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