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Investing in the High Yield Municipal Market: How to Profit from the Current Municipal Credit Crisis and Earn Attractive Tax-Exempt Interest Income

Book Description

A practical guide to profiting from the high yield municipal market

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 instruments

  • Includes interesting case studies to fully illustrate the high yield investing process

  • Written by an insider of both the asset management industry and the broker-dealer community

Investing 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.

Table of Contents

  1. Cover
  2. Contents
  3. Title
  4. Copyright
  5. Dedication
  6. Foreword
  7. Preface
  8. Acknowledgments
  9. Chapter 1: The Basics of High Yield Municipal Bonds
    1. What Is a High Yield Municipal Bond?
    2. Common Yield Measurements
    3. Key Risk Factors
    4. Notes
  10. Chapter 2: A Brief History of the High Yield Muni Market
    1. The Early Years
    2. Historical High Yield Opportunities
    3. Credit Setbacks
    4. The Advent of Leverage
    5. The Credit Crisis of 2008 and Its Aftermath
    6. Note
  11. Chapter 3: The Investment Case for High Yield Municipals
    1. High Yield Municipals versus Other Asset Classes
    2. The Impact of Bond Evaluations
    3. Six Basic Tenets of High Yield Municipal Investing
  12. Chapter 4: High Yield Credit Risk Revisited: The Default Record
    1. Definitions of Default
    2. Default Record for Rated Bonds
    3. Default Record for Unrated Bonds
    4. Recent Default and Impairment Statistics
    5. Recovery Rates
    6. Lessons from Historical Default Records
    7. Notes
  13. Chapter 5: Professionally Managed High Yield Municipal Products
    1. Actively Managed Products
    2. Passively Managed Products
    3. Notes
    4. References
  14. Chapter 6: Investing in Individual Bonds
    1. A Few Preliminary Considerations
    2. Investing in the Primary or New Issue Market
    3. Investing in the Secondary Market
    4. Executing Trades in the Secondary Market
    5. Monitoring Your Holdings
  15. Chapter 7: Investing in Distressed Bonds
    1. The Distressed Municipal Universe
    2. The Theory and Practice of Distressed Municipal Investing
    3. Notes
    4. Reference
  16. Chapter 8: Case Studies
    1. Distressed Opportunity: National Benevolent Association
    2. Fallen Angel: Denver International Airport
    3. Notes
  17. Chapter 9: Managing Bond Defaults and Bankruptcies
    1. Nine Differences between Chapter 9 and Chapter 11
    2. Bondholders’ Rights and Remedies in Workouts
    3. Accounting Issues Related to Chapter 9
    4. References
  18. Chapter 10: Common Types of High Yield Municipal Bonds
    1. Corporate-Backed Municipal Bonds
    2. Hospital Revenue Bonds
    3. Toll Road Bonds
    4. Housing Bonds
    5. Continuing Care Retirement Communities (CCRC) Bonds
    6. Notes
  19. Chapter 11: Special Types of High Yield Municipal Bonds
    1. Tobacco Settlement Bonds
    2. Land-Secured Bonds
    3. Notes
    4. References
  20. Chapter 12: Up-and-Coming High Yield Sectors
    1. Charter School Bonds
    2. Native American Gaming Bonds
  21. Chapter 13: High Yield Investing in the Post–Bond Insurance Era
    1. Learning from History
    2. Prospects for Tax Reform
    3. The New Compliance Landscape
    4. New Credit Opportunities
    5. Advances in Trading and Price Discovery Technology
    6. Buy American!
  22. Appendix: The Dodd-Frank Act and the Municipal Market
  23. Selected Resources for Investors
  24. About the Author
  25. About the Contributors
  26. Index