Municipal Bond Investing

Posted in Fixed Income Trading. Hits: 4679

Municipal bonds offer conservative investors an attractive mix of characteristics. We have decades of experience in trading individual Tennessee municipal bonds for our discretionary and brokerage clients. We have the experience to effectively address the inherent risks of municipal bonds and to navigate the myriad of primary and secondary offerings in the market. We exercise due diligence in analyzing the unique terms of each prospective bond before we invest or recommend it:

  • Credit risk
  • Call Risk
  • Yield analysis
  • Duration
  • Reinvestment risk
  • Issue specific concerns- extraordinary calls, bond covenant terms, debt coverage ratios

Our decision making process isn't complete until we effectively negotiate a competitive price execute the trade at the best price that we can. This is a labor intensive process that LeConte adheres to even as our competitors through lack of expertise or attention to detail, fail to execute. When circumstances dictate a bond sale, we exercise the same diligence on that side of the transaction as well. Individual investors may find it difficult to sell individual State and local municipal bonds at good prices or in a timely fashion. During our tenure in the industry, we have developed an extensive network of contacts that help us find buyers and bid competitively.

Disclosure: Municipal bonds are federally tax-free but may be subject to state and local taxes, and interest income may be subject to federal alternative minimum tax (AMT). The purchase of bonds is subject to availability and market conditions. There is an inverse relationship between the price of bonds and the yield: when price goes up, yield goes down, and vice versa. Market risk is a consideration if sold or redeemed prior to maturity. Some bonds have call features that may affect income.

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