New York, NY (June 26, 2012
Bondview.com has announced the availability of its new investor tools to provide expert real time analysis, alerting and trading information about defaulted municipal bonds. This new free tool is available now and gives investors a centralized web site to review information about defaulted bonds, a task that was previously difficult to do. Bondview.com is a leading provider of free information for investors and professional advisors in the municipal bond market.
According to a media sources, a recent internal J.P. Morgan document raised doubts about the safety of municipal bond investments and suggested more potential defaults may occur amid ballooning unfunded pension and health care liabilities. A 2011 report from Roubini Global Economics highlighted the need for better bond default information and said “Tracking the total number of defaults can be difficult because they are concentrated among small bonds that aren’t rated by national rating firms.”
Robert Kane, CEO of Bondview.com said “Many defaulted or impaired bonds are concentrated among smaller bond issuers that trade infrequently, are no longer rated by the big 3 rating agencies and have minimal news coverage.” This has resulted in very little useful information being available for retail investors or professional advisors.
While few investors purposefully buy defaulted bonds, they may end up owning them after having purchased good bonds which later go bad. Deciding if and when to sell these bonds quickly becomes a concern since when a bond defaults or is impaired in some way, its price usually, but not always, declines. Historically many, but not all, defaulted bonds are eventually paid back. That said, the risk of a potential halt in bond interest and or principle payments results in steep price declines caused by natural investor selling which is often exasperated by marketplace illiquidity.
Bondview users can now easily see which defaulted bonds actively trade at or close to par (typically 100), suggesting the marketplace believes the problems are only temporary or will be worked out with minimal loss. However, there are many municipal bonds that trade at large discounts indicating the marketplace believes there is little value remaining.
Looking at the Bondview website for the Most Active List for defaulted bonds for the last 30 days shows a Florida Housing issue trading at 103, a California tobacco bond issue trading at $79.50 and an Illinois sports facility bond issue trading at just $3. This information can be used by investors to determine whether there is opportunity or not in select defaulted issues.
In the Trending Up & Down section, the complete trading history of all defaulted bonds are monitored 24 hours a day to identify patterns that may reveal a turnaround is occurring that merits further investor research.
During the two year period from July 2010 thru June 2012, the $229 million in bonds issued for a downtown Chicago luxury continuing-care tower defaulted. The bond known as Clare at Water Tower, fell into bankruptcy, was then restructured and finally re-emerged from bankruptcy after a heated auction process and is now under new ownership and management. During this time, there were large up and down price swings starting when the price fell from 100 to open at 25. Continued investor selling amid a lack of useful information and thin trading eventually helped pushed the price to $1 in March 2012. As of June 19 the bond had increased by more than 1300% last trading at $13.70. “An attorney involved in the case projected that the recovery rate would top 20 cents on the dollar” according to a recent Bond Buyer article on the case. Presumably most bondholders lost money on this investment but some made money.
Bondview analyzes the trading patterns of about 45,000 municipal bond transactions daily for unusual activity. Bondview is able to immediately identify so called “Story Bonds”, i.e., the Clare Water Tower bonds, that significantly decrease or increase in price, amid volume changes and little news.
Bondview also generates its own proprietary estimated 3rd party prices, market implied ratings and many other features including social networking forums where users rate and chat about individual bonds.
About Us: BondView is the leading free investor advocate for municipal bonds. Our mission is to promote smart, informed decision making about municipal bonds. We are dedicated to providing timely and accurate real-world market information to improve transparency for investors and professionals.
For more information contact: Craig Charlton at BondView, LLC. Telephone: 866-261-9533. news(at)bondview(dot)com , http://www.bondview.com. 207 Mineola Ave., Suite 217, Rosyln Heights, NY 11577.
Tags: municipal bond defaults