rocky

Muni Bond Holders: Don't Lose Sleep Over Insurance Guarantee Failure

If your bonds are backed by property taxes or an essential revenue stream such as water charges, I wouldn't worry about the bonds. They probably didn't need the insurance to begin with, but a lot of buyers were willing to pay higher prices (accept lower interest rates) for insured bonds so the bonds were insured. On the other hand, if your bonds are backed only by lease payments to be made by a financially weak city that you would not want to live in, you have more to worry about. If the retirement system for public employees is not fixed in California in a few years, I could easily see some California issuers defaulting on their lease bonds (certificates of participation) down the road.