Municipal Bonds

What kind of job do you have where your boss can delegate this type of task to an employee?

I do not have a job description. My boss (the majority owner) and the other owners hired me for special projects. Well this is really special because I know diddly squat about munis. My few finance classes at the undergrad level didn't prepare me for this.

I just signed up on Bond Buyer and have access to financial databases, but I need some direction from the Money Talk board.

With a lot of muni bonds their rating is based on nothing more than their insurance. If they're insured by a well-regarding company, they're AAA. The potential risk comes from the bond insurer being downgraded. If that happens, the muni itself is liable to be downgraded if it's a smaller municipality with non-readily available financials.

I would try to get my hands on the prospectus, if available, or something else that actually shows their statements. That would make me feel more confident in a high investment grade rating if I knew it was supported by the numbers, not just the insurance.

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I believe insurance support actually improving/backstopping muni ratings died about 18-months ago. Seriously, Vanguard killed their insured muni funds as the insurance isn't worth squat.

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You could be right. I haven't looked at muni's in probably 2 years. But I do wonder how smaller municipalities are rated at this point? It was my understanding that often times, the rating agencies wouldn't even look at their finances if they were insured unless they were substantial offerings. Could be wrong, of course.

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Seriously, if he's not getting a professional to do this

1) he doesn't know dick about finance
2) he doesn't deserve any better info than that

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that's what I was thinking

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Seriously, if he's not getting a professional to do this

1) he doesn't know dick about finance
2) he doesn't deserve any better info than that

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He is worth millions and knows a lot about the market and finance in general. I think this is a test to see what my knowledge is and to see what he will use me for in the future.

stick with general obligation munis.

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I think this is a test to see what my knowledge is and to see what he will use me for in the future.

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Based on this:

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Well this is really special because I know diddly squat about munis. My few finance classes at the undergrad level didn't prepare me for this.

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...doesn't look like you'll pass the test.

I have invested in many muni's over the years. A few key points:
(1) Invest with in state muni's to get the best yield.
(2) Spread your money - if you are investing $1,000,000 buy 10 different muni's not just one.
(3) Make sure the maturity dates meet the investors time table.
(4) Buy muni's with a rating that your are comfortable with.

See if you can find some close-end bond funds trading at a discount (Nuveen is a good start).

Also, take a look at auction rate preferred securities. You can still buy them at maybe 90 cents on the dollar and they are, IMO, a true AAA piece of paper. It's near impossible for me to imagine you having a principal loss.