Research

Q: Your research reports show Axios Advisors ratings for the issues you review. How should we interpret those ratings?

A:  First, we want to clarify that we are not an official rating agency, i.e. we have not been paid by the bond issuers to rate their bond issues. The Axios "rating" is our way of expressing whether or not we agree with the current agency ratings. For instance, if we rate an issue "BBB" while the official ratings from Moody's and S&P are still in the "A" range, this means we expect the bonds to be downgraded to "BBB" in the future, based on our analysis.

Our ratings can also be construed as a valuation benchmark. To use the example above, we would not obviously be inclined to pay "A" prices  for a credit that we view as only "BBB" in quality, unless the bonds are already trading at prices consistent with the lower rating. ( Back to Top)

Q: What Types of Bonds Do You Cover ?

A: With a few exceptions, we generally target large, liquid issues in both the corporate and municipal markets. In municipals, where there are thousands of different issuers, we usually stay with issuers which have $100MM or more of aggregate bond issuance and which have decent liquidity in the marketplace. In terms of ratings, we look at anything from "B" to "A" (but no unrated "junk bonds"), mostly in the "retailable" BB+ to A- range, where research can add value. The idea is to write about investment ideas that you can execute for your typical high net worth client with minimum efforts, considering the over-the-counter nature of the bond market. In time, we will let the market tell us what we should write about by monitoring where trading flows are at any point in time. Of course, if we see an opportunity out there that has been overlooked by the market, we will bring that to your attention also. (Back to Top)

Q: In your reports, you refer to trading levels or recent trades. What are your sources for that information?

A: We refer to daily trade data reported by the Municipal Securities Rulemaking Board (MSRB), which are available for public review at www.investinginbonds.com . We generally look at inter-dealer trades of $100K or more in order to assess what trading levels are before retail markups. In rare instances where an issue is thinly-traded or has not traded in a while, we might refer to the quoted bid side from our sources at broker-dealer trading desks. Of course, the prices we mention are meant only as guideposts and we make no guarantee that you as an individual will be able to execute your trades at the price levels reported by us. 

Asset Management

Q:  I'm a fee-based Registered Investment Advisor. I do have high net worth clients who need more income, preferably tax-free. Why should I use your separate account services instead of just putting them into a high yield municipal bond fund ?

A:  Financial planning experts generally agree that, for high net worth investors, separate account portfolios offer distinct advantages over mutual funds. The clients’ portfolios can be completely customized to their own financial objectives and tax situation. They can view their holdings in real time through the custodian’s web site. Since custom portfolios do not have to trade to accommodate fund redemptions, the clients save trading costs and incur no “surprise” tax gains and losses. Management fees are also quite competitive with mutual funds. In effect, you retain all the tax benefits of direct bond ownership and still have professional portfolio management. (Back to Top)

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