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Muni Bond Talk

Special Assessment Bonds Trigger 2009 Muni Defaults

Muni bond defaults moved past $4 billion from January thru September 2009  driven partly by the bursting of the real estate bubble which in turn  triggered  defaults in “Special Assessment” bonds, according to the Distressed Debt Securities Newsletter and Bloomberg.

The problem is caused by builders who issued tax-exempt bonds backed by these Special Assessment bonds to finance infrastructure, such as  new schools. Builders are not paying the tax debt as houses go unsold and land  values decline. For example  in Adelanto, California, about $17 million in  bonds defaulted as school construction proceeded faster than  home building. The real estate crash caused fewer people to move into the area which means less tax revenue to support new schools. Special Assessment bonds are a real specialty area.

BondView.com can help you learn more about Special Assessment bonds…. 1) Take a look at all California Special Assessment bonds traded within the last 24 hours, see up to date yield curves for these bonds, or get an objective view of own muni bond portfolio. Or 2) For more info about Special Assessment Bonds contact an industry leader: David Taussig & Associates

(In the interests of full disclosure,  BondView is not paid for this recommendation. We are just sharing our industry contacts with you.)

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4 Responses to “Special Assessment Bonds Trigger 2009 Muni Defaults”

  1. john Hanick says:

    All good points! These bonds sound messy. Wouldnt touch em with a 10 ft pole. But thks for the summary anyway. Good to see that its the low quality items that are defaulting rather than GOs!

  2. John hockney says:

    FACS bonds are great if u are buying but awful I u are selling. Good luck to all

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  4. Danilo Vais says:

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