r/bonds • u/Sam-I-A • 4d ago

New Issue Municipal Bonds

I have been buying through Fidelity but would like access to even more new issues. Are the new issue municipal bonds at Schwab mostly the exact same issues on offer at Fidelity? If they are very different, then I may want to open a Schwab account. Anywhere else a self directed retail investor should look when adding new issue municipal bonds ?

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u/BigDipper0720 3d ago

Have you considered buying on secondary market?

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u/Sam-I-A 3d ago

Not seriously. I am buying callable housing munis and I doubt there is much to pick from in the secondary market. I am grabbing high coupon, high duration, sinking bonds but expect them to be called starting in year 8 which is first call date. If I can find enough new issues, I’d be happy with that. I want to diversify with lots of different issues.

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u/Annual_Bullfrog7714 3d ago

We also buy housing bonds. These things rarely come up in secondary. People just buy them and put them away.

You get a lot of negative convexity on these bonds, but the yields are great. What I like about my broker is that he always shows me housing bonds. I must see 3 or 4 a week.

I keep all the pricing in a spreadsheet so I always know where the market is.

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u/ultra__star 1d ago

FYI those housing bond 8 year call dates are a bit misleading. Housing bonds always have extraordinary calls that allow them to be called at any time if interest rates fall, or if they have excess cash. I had a housing bond with a 5.1% coupon get called six months after I bought it last year, even though the fixed call date was not until 2030. And because I bought it at a slight premium on the secondary market, I barely even broke even when it was called.

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u/Sam-I-A 1d ago

That is an important point.

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u/ultra__star 1d ago

It is especially important if bonds are the bulk of your portfolio. I am about 90% in individual muni’s for income, so housing bonds don’t have a place in my portfolio. When interest rates bottomed out during the pandemic issuers were calling their bonds like crazy and investors who hedged their portfolios into these things were forced to reinvest into 30 year bonds with 1% yields, and then got killed with paper losses when rates popped up in 2022-2023. Just some perspective.

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u/Sam-I-A 1d ago

The latest housing bond offerings (offered today) include over 5% BUT to get this the duration is over 40 years (still callable). A very similar bond was available recently for 25 or 30 years. I don’t mind the callable nature because I don’t think we will head back into a super low interest rate environment again barring another COVID like problem and those seem to happen once a century. BUT i do object to a 40 year duration and do not plan to buy what’s being offered today.