Wednesday, November 17, 2010

Up In Smoke

Once again, the daily Bond Buyer proves that the Series 7 information is much more interesting than folks realize. Remember when all the state attorneys general were suing "big tobacco" about 12 years ago? Well, "big tobacco" settled in exchange for the states dropping all further lawsuits against them. Do you suppose the states would wait for that settlement money to come in before spending it?
Heck no. Most of them sold municipal bonds called "tobacco bonds," backed by the settlement money that would come in over the years. As revenue bonds, these things are only as safe as the cash flow supporting them. And then the unthinkable happened--people started quitting faster than anyone predicted. With the recent recession, coupled with plunging tobacco use, many of the bonds now face default. You gotta check this out at:

No comments:

Post a Comment