What type of muni bonds offer the best values?
We think there’s an opportunity with general obligation (GO) bonds of states with strong underlying economies facing current budget issues. With the recent economic softness, many large states have had difficultly in balancing budgets and continue to face major structural deficits. Although they may have a strong and diverse economy, they’re challenged by political difficulties to match revenues and expenditures. Their heavy debt issuance and credit downgrades have cheapened the market, increasing investors’ yields. In the long-term, as the economy gets back on track and state revenues improve, we believe this is a good sector to focus on for value. As a matter of history, the last state GO default was in 1841 [in Mississippi and Illinois]. Q: Tell me the names of some bonds you like? A: We own A-rated California GOs yielding 4.7% that are maturing in February of 2025. Things are improving in California’s economy, although in the short-term there may be some political battles on this y
