Auction Rate Securities

Anyone else going through this pain right now? They have had failed
auctions and declared the market illiquid right now. My wife and I parked
a large sum of money there short term and it seems as though it's frozen.

I'm scared shitless right now, we were told these were secure and the
principal was insured. Right now they are talking about converting some
to 30 year bonds, money would be tied up for 30 years at 1-2% interest

I won't be sleeping much over the next few days!

the curse of the free lunch strikes again.

Prince, a buddy of mine is a trader at this firm in NYC, they have just started creating a secondary market for these securities, they might be able to help you out...

I'll check it out thanks.

I wonder if any are selling close to par? I bet they are discounted 10-25%.

"the curse of the free lunch strikes again"

I'm brain dead, "no free lunch in an efficient market"!

It looks like the loss is closer to 40% if sold now.

Were you able to unload them?

Not yet, I'm talking with an attorney, I may unload them and go after the brokerage for the diff.

I have closed end preferred AAA, the ones that haven't been moving.

I have used them and you should be getting compensated at a higher interest rate for the illiquidity. Have you actually lost any principal or are you just speculating that you have? most ARS have not lost their par value they just cannot be sold. If they are converted to long term bonds they will pay you off first, your money will not be converted to the bonds automatically.


I'm hearing a ton of conflicting info right now. I have not lost any principal yet and won't until I sell.

Nuveen has stated if they have to liquidate and pay the preferred first they would keep the best interest of all shareholders in place prior to any distributions. Meaning a loss in principal in my eyes.

email me privately and we can I tell you more.

What is your Advisor telling you?

Email sent.

I've been told 3 - 6 months before liquidity returns. I'm skeptical.

Nuveen Seeks to Refinance Auction-Rate Debt for Funds (Update1)

By Christopher Condon

March 12 (Bloomberg) -- Nuveen Investments Inc., the largest U.S. manager of closed-end funds, is seeking to restructure the debt of its 100 funds that have issued auction- rate securities.

New financing has been arranged for a ``substantial' portion of the auction-rate preferred stock sold by its taxable funds, the Chicago-based company said today in a statement. While Nuveen plans to begin announcing specific agreements by the end of March, it may take four to six months to complete refinancing for all the taxable funds.

Nuveen sponsors 120 closed-end funds, including 100 that have leverage and together have issued $15.4 billion of auction- rate securities. It has 13 taxable leveraged funds that invest in equities and government and corporate debt, and have issued $4.3 billion of the securities. The company has 87 municipal- bond funds with $11.1 billion in auction-rate securities.

About half of all closed-end funds sold auction-rate securities to finance additional investments in government and corporate bonds, a strategy aimed at boosting returns. Auctions began to fail amid investor concern that insurers backing the debt would be downgraded. Preferred shareholders were left with about $60 billion in securities they couldn't sell as brokers declined to step in as buyers as they had in the past.

To contact the reporter on this story: Christopher Condon in Boston at

Last Updated: March 12, 2008 08:09 EDT

I take it even with a refi they will be bought back at a price less than par?

Everything I've heard and read indicates they'll be eventually redeemed at par.

BUT who knows for sure.

It is not a credit issue it is a liquidity issue. they will more than likely be purchased at par just like the Eaton Vance refi earlier this week.

fingers are crossed.