Fellow Fund Investor,

Danger is all around for bond-holders, and more is dead ahead. Low yields, inflation threats both real and perceived, and most disturbing, muni-bond default rates are soaring.

Munis are never supposed to default. Turns out, they do. Look over Moody’s reports, and you find that 54 municipal bonds went poof from 1970 to 2009. Comes to about one a year over 39 years. So why worry?

This year is alarmingly different.

According to Statline.org, states are anticipating budget gaps of more than $12 billion for the current fiscal year, and $72 billion of deficits for the next, for a total of $537 billion in budget gaps between fiscal 2008 through fiscal 2013.

Local governments, like many households, simply have too much debt and too little hope to ever pay it back.

Maybe now's the time for Dominican Bonds!

Any ideas....

S.

April 2010

Santo Domingo.– Moody’s Investors Service raised Dominican Republic’s credit rating one level on the prospects for economic growth, Bloomberg reported.

According to the news website, Moody’s raised the Dominican Republic’s government bond rating to B1, four levels below investment grade, from B2 with a stable outlook. The rating is in line with Mongolia, Lebanon and Suriname.

“In addition to the Dominican Republic’s long-term track record as a high-growth economy, its ability to post positive gross domestic product growth last year denoted an increased ability to overcome external shocks relative to the past,” analyst Mauro Leos was quoted as saying by Bloomberg.


Probably should go with Mongolia.