Subject: New York Bond Investment Risk Due To AIDS Care
Date: Published: 2/24/92 (51 lines)
Source: Wall Street Journal. Copyright Dow Jones & Co. Inc.

    Credit Markets:
    `Mini-Munis' Open Doors for Small Investors
    ----
    By Earl C. Gottschalk, Jr.
    Staff Reporter of The Wall Street Journal

    At last, the little guy can get a good deal in the
 municipal bond market.
    That's the pitch being made for "mini-munis," a
 small-denomination sort of municipal bond that is cropping up
 across the country, notably in New York City and California.
    Many investment advisers agree that mini-muni bonds are
 worth a look by small investors -- as long as they're
 absolutely sure they won't need the money back before the
 bonds mature.

[100 lines irrelevant to AIDS removed.  -- sysop]

    There's also the usual bondholder risk of interest rates
 rising, leaving the minibond holder stuck with a
 lower-yielding investment.
    And some analysts are troubled over the credit risk for
 New York City general-obligation bonds.  The city is facing
 huge costs for health care for poor people and for caring for
 AIDS patients.  Outstanding New York City issues are currently
 rated Baa-1 by Moody's Investors Service Inc. and
 single-A-minus by Standard & Poor's Corp. Those ratings
 signify a low-tier of investment-grade issues.
    New York City has never defaulted on general-obligation
 long-term bonds.  But as a result of a financial crisis in
 1975, New York City did default on short-term notes.  Most of
 the notes were converted into long-term bonds, and the city
 paid principal and interest payments on these bonds over a
 longer time period.  Holders of the notes eventually got their
 principal and interest paid.
    Robert Bissell, senior vice president in Wells Fargo
 Bank's Private Banking Group in Los Angeles, argues that New
 York City residents should forget about buying the city's
 bonds.  "A little increment of after-tax income is paltry when
 things go wrong -- as they are likely to do in New York
 City," he says.  Mr. Bissell won't predict that the city will
 default but says that the budget pressures and crumbling
 infrastructure don't present a "sound credit risk."

[This article is made available here by Dow Jones Co. for the
 personal and non-commercial use of callers to this bbs, in the
 hope that it will be of some help to those who are suffering
 from the disease and others who are seeking to help them.]