Replies to post #112996 on Biotech Values

[oc631]

Clearly a sign of turmoil in the muni market and I don't deny great values can be had at some point in time. If the economic recovery sputters you will see certain states (Illinois is a good example) and even more municipalities default on their debt. What's happening is an adjustment to a higher risk premium across the entire muni market. IMO the market is also factoring in a selloff in treasuries which will make muni's less attractive at their current yields. I don't see money moving back into the muni market anytime soon and I expect further downside risk.

"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.

I guess Barron's sees no risk to Uncle Sam's AAA credit rating.