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More About This Title Investing in the High Yield Municipal Market: Howto Profit from the Current Municipal Credit Crisis and Earn Attractive Tax-Exempt Interest Income
English
This unique guide to the high yield municipal bond market sheds some much-needed light on this esoteric but profitable corner of the fixed-income world. It fills the void between the general reference handbooks on municipal bonds and the superficial treatment of do-it-yourself bond guides, with an emphasis on practical trading applications.
Having witnessed the beginning of the modern high yield tax-exempt institutional market, author Triet Nguyen documents its historical evolution, outlines a conceptual framework for high yield tax-free investing, one that takes into account both interest rate and credit cycles, and reviews the latest historical data on municipal defaults, including for the first time the non-rated sector. Current distressed opportunities are also discussed. Along the way, Nguyen takes the time to discuss in detail the pros and cons of investing in pre-packaged high yield vehicles—from mutual funds to hedge funds to exchange-traded funds—with frank and objective insider tips on how these slickly marketed products really work. For the truly committed investor who wants to do his or her own homework, Nguyen and a group of industry experts go over the key investment considerations for several major classes of high yield tax-exempt bonds.
Offers unique insights into the risk/return, trading, and liquidity characteristics of high yield municipal instrumentsIncludes interesting case studies to fully illustrate the high yield investing processWritten by an insider of both the asset management industry and the broker-dealer communityInvesting in the High Yield Municipal Market will put you in a better position to profit in this arena and help you excel in today's tough financial environment.
English
Triet Nguyen is a thirty-year veteran of the fixed-income markets and a high yield municipal bond expert. He has designed, marketed, and managed every type of buy-side investment product, from mutual funds (open and closed-end) to managed accounts and hedge funds. He was Senior Vice President at B.C. Ziegler in charge of tax-exempt high yield and taxable municipal bond trading (including Build America Bonds) and Managing Director of Saybrook Capital, LLC, managing municipal bond hedge funds. In addition, Mr. Nguyen was President of Axios Advisors, LLC, a Vice President/Portfolio Manager of the John Hancock Funds, and a Senior Portfolio Manager of the Putnam Funds. Triet received a BA in economics and an MBA in finance and accounting from the University of Chicago.
English
Foreword xi
Preface xv
Acknowledgments xix
CHAPTER 1 The Basics of High Yield Municipal Bonds 1
What Is a High Yield Municipal Bond? 1
Common Yield Measurements 2
Key Risk Factors 5
Notes 13
CHAPTER 2 A Brief History of the High Yield Muni Market 15
The Early Years 15
Historical High Yield Opportunities 20
Credit Setbacks 22
The Advent of Leverage 23
The Credit Crisis of 2008 and Its Aftermath 24
Note 25
CHAPTER 3 The Investment Case for High Yield Municipals 27
High Yield Municipals versus Other Asset Classes 28
The Impact of Bond Evaluations 34
Six Basic Tenets of High Yield Municipal Investing 38
CHAPTER 4 High Yield Credit Risk Revisited: The Default Record 51
Definitions of Default 51
Default Record for Rated Bonds 53
Default Record for Unrated Bonds 55
Recent Default and Impairment Statistics 57
Recovery Rates 60
Lessons from Historical Default Records 61
Notes 64
CHAPTER 5 Professionally Managed High Yield Municipal Products 65
Actively Managed Products 66
Passively Managed Products 82
Notes 86
References 86
CHAPTER 6 Investing in Individual Bonds 87
Richard Daskin, CFA, CFP
A Few Preliminary Considerations 87
Investing in the Primary or New Issue Market 88
Investing in the Secondary Market 89
Executing Trades in the Secondary Market 90
Monitoring Your Holdings 91
CHAPTER 7 Investing in Distressed Bonds 93
The Distressed Municipal Universe 95
The Theory and Practice of Distressed Municipal Investing 98
Notes 101
Reference 101
CHAPTER 8 Case Studies 103
Distressed Opportunity: National Benevolent Association 103
Fallen Angel: Denver International Airport 106
Notes 111
CHAPTER 9 Managing Bond Defaults and Bankruptcies 113
Kenji Mochizuki, CIRA
Nine Differences between Chapter 9 and Chapter 11 113
Bondholders’ Rights and Remedies in Workouts 119
Accounting Issues Related to Chapter 9 128
References 132
CHAPTER 10 Common Types of High Yield Municipal Bonds 135
Patrick Flanagan
James Lyman
Keith Rochelli
Ken Rogozinski
Corporate-Backed Municipal Bonds 136
Hospital Revenue Bonds 146
Toll Road Bonds 155
Housing Bonds 161
Continuing Care Retirement Communities (CCRC) Bonds 171
Notes 178
CHAPTER 11 Special Types of High Yield Municipal Bonds 179
Richard Larkin
Shannan Wilson
Tobacco Settlement Bonds 179
Land-Secured Bonds 190
Notes 199
References 199
CHAPTER 12 Up-and-Coming High Yield Sectors 201
Jon Barasch and Edward Krauss
Jeffrey Lamb, Matt Eden, and Melissa Robertson Charter School Bonds 202
Native American Gaming Bonds 207
CHAPTER 13 High Yield Investing in the Post–Bond Insurance Era 215
Learning from History 215
Prospects for Tax Reform 216
The New Compliance Landscape 218
New Credit Opportunities 219
Advances in Trading and Price Discovery Technology 222
Buy American! 223
Appendix: The Dodd-Frank Act and the Municipal Market 225
Kenji Mochizuki, CIRA
Regulation of Municipal Securities 226
Changes to the Board of the MSRB 229
Commission Office of Municipal Securities 231
Municipal Securities Studies 232
The Volcker Rule 235
References 237
Selected Resources for Investors 239
About the Author 245
About the Contributors 247
Index 255
