Biotech Values

[DewDiligence]

Re: Munis are a screaming buy

From the current issue of Barron’s (http://online.barrons.com/article/SB50001424052970204853904576090033417218302.html ):

The best indication that the upheaval in the muni market extends beyond credit concerns to the emotional level is that triple-A pre-refunded tax-exempt bonds trade at a higher yield than Treasuries. "Pre-re" bonds are collateralized by U.S. government securities held in escrow that pay the debt service on the munis; thus they are dependent not on the credit of the issuing state or municipality, but Uncle Sam. Yet pre-re bonds yield more than Treasuries—though they are basically the same credit and are tax-exempt.

For instance, a 30-year, triple-A pre-re tax-exempt muni closed Friday at a 4.90% yield—well above the 4.57% on the federally taxable Treasury 30-year bond. In 10-year bonds, the pre-re muni yielded 3.42%, a hair more than the 3.40% on the benchmark Treasury note. At the short end, 0.75% for a two-year pre-re muni beats 0.61% on the comparable Treasury.