Duration: 2:31
Transcript:
As we know, Moody’s downgraded the treasury markets this week. What does that really mean for you?
If you hold municipal bonds, it might mean something significant. It might not. It depends on what type of municipal bonds and the underlying credit quality and quite frankly the underlying municipality that is backing that bond. For example, what has happened is that we’re seeing the overall market trade down in price, up in yield due to the fact of this downgrade.
Going back to the municipal bonds, what does it really mean to you? If you own debt that is federally funded by an agency let’s use the Smithsonian as an example. If it’s funded by federal agencies where most of the debt service is coming from, either ticketing fees and or a bulk of it is coming from the federal government, you might want to reevaluate what you’re what you’re looking at, what you have. Talk to a professional about it. Talk to us about it. Make sure that you understand what you’ve got. If you own, let’s just say, municipalities that are heavily dependent upon rents from federal agency buildings.
You might wanna reconsider things and make sure that everything is status quo in your account. Talk to a professional. Talk to us.
Look at what you’ve got. Conversely, if you own municipal bonds that are, say, on a, municipal utility district in Texas or some sort of levy improvement district in, say, Florida or Colorado or Oklahoma or whatever, backed by taxes, ad valorem taxes specifically, then you should be okay.
The federal downgrade is not really going to impact a, let’s say, a neighborhood sitting in Houston, Texas where the residents of that neighborhood are paying taxes and those tax monies go to pay your bonds. So it really depends on what you’ve got, and it really depends on what you’re looking for out of your investment. So take a look, take an inventory, take a stock of what you’ve got. If you have any questions, give us a call. But keep in mind that the ratings downgrade will impact various attributes of municipal bonds, and I hope that we’ve kind of, given you an idea or something to ponder about over the next few moments. So thank you very much for joining us.
