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"When these bonds become distressed, selling them can be difficult given the lack of liquidity in the market for distressed bonds. That enables knowledgeable buyers the opportunity to strike a good deal"
Jon Schotz, Saybrook |
The municipal bond market is booming in the US. Municipalities and other tax-exempt borrowers sold a record $31 billion of municipal bonds in September, and the 2007 totals are expected to exceed $420 billion.
The appeal of the municipal bond market is predominantly two-fold for investors. First, the Internal Revenue Service code looks favourably on bonds that fund projects to help a community grow or develop infrastructure. As a result, the returns on municipal bonds are tax-exempt. Second, it’s an inefficient market where there is inconsistent disclosure and more than 60,000 issuers with in excess of $2 trillion outstanding. So for those with expertise, the muni market can provide big opportunities.
Saybrook Capital sees...
