More municipal reset bond auction failures?
It sure looks like there are more municipal reset bond auction failures today. Shown below are today’s auction results (as given by Fidelity) for California:
Some of the issues are resetting at more than 10%!
Update: After this post was made, Bloomberg’s posted an article on this issue [LINK].
Stumble it!
February 12th, 2008 at 4:22 pm
I noticed that too. Is this from Fidelity? I noticed that today a bunch of todays Resets throughout the country at Fidelity have noticeably high rates. Some are double digit rates. One just didn’t rates see anywhere near these levels until recently…or maybe not until today. Very strange.
J.
February 12th, 2008 at 4:32 pm
Also, it’s strange how if you own a Muni Money Market like one of the Vanguard state Muni MM funds, the yields are now incredibly low compared to other MM funds including the Vanguard Admiral US Treas. I just moved some money into VUSXX from a Vanguard state muni MM fund.
I did notice that, in the prospectus, Vanguard talked about how they look carefully at the natural/underlying credit rating of the munis they invest in, so that COULD explain why the yields are so low for the Vanguard Muni MM funds.
Jay
February 12th, 2008 at 4:59 pm
WellsFargo is also claiming that Vanguard is locking down their TaxEx MMFs, WF said VG won’t accept buy’s for VTCXX any more. I also wasn’t able to sell VTCXX via the web @ WF, they said I’d have to call in order to sell. I haven’t yet seen if this affects funds held directly at VG yet.
February 12th, 2008 at 5:13 pm
Is there a reason why Vanguard is locking down their TE MMF?
I hold VCTXX at VG directly and I was able to exchange OUT of it yesterday.
February 12th, 2008 at 5:29 pm
Simon, I’m experiencing the same problem. I’ll call them to sell my VCTXX. I commented earlier that the web-site wasn’t allowing buys or sells. But now I recall the guy on the phone saying that buys weren’t allowed. He probably meant that sells were still allowed on the phone.
February 14th, 2008 at 9:07 pm
Brokers describe it as a “crisis of confidence”. Buyers have been told to sit on their hands whilst risk assessors go through the assets again. The insurers are still being downgraded or held “on watch” which leaves risk analysts no choice but to adopt worse-case valuations. This, in turn, means buyers will be sat on their hands a while longer despite the profit potential.
Time will restore confidence but there are more auction failures ahead.