Monoline Insurer News

Canadian Imperial Bank of Commerce states that it had around $25 billion in monoline insurer exposure.  For this most part, this had been suggested by analysts, many of whom were growing tired with CIBC’s lack of disclosure of the monoline exposure.  While some disagree, this type of exposure may lead CIBC to raise even more capital than it already has to keep itself afloat and away from devastating margin calls.  At risk, is the bank’s domestic retail bank which would first require the infusion of capital.  CIBC hopes to allay these fears and a possible ‘run’ on the bank by retail consumers.

Here’s a look at the top dividend yielding municipal bond ETFs right now with an average credit quality of AA or better:

1) Nuveen Dividend Advantage Municipal Fund 2 (AMEX: NXZ) 6.09%, 8.45% (TEY), AA average

2) Eaton Vance Insured Municipal Bond Fund (AMEX: EIM) 6.03%, 8.38% (TEY), AA average

3)  Eaton Vance Insured Municipal Bond Fund II (AMEX: EIV) 5.93%, 8.23% (TEY), AAA average

4) Nuveen Select Quality Municipal Fund (NYSE: NQS) 5.91%, 8.21% (TEY), AA

5) Nuveen Dividend Advantage Municipal Fund 3 (AMEX: NZF) 5.87, 8.15% (TEY), AA

Taking a look at the municipal bond market it appears that there is a still a lot of fear priced into these issues.  Another way to look at this is to see which ETFs are carrying the largest price/NAV discount.  See below.

1) -14.82% Seligman Select (SEL) - largest holdings in AL, CA, NY, NJ, AK

2) -14.67 MBIA/Claymore Managed Duration Investment Grade (MZF) - largest holdings in CA, MO, CO
3) -14.16 Blackrock Florida Insured (MFL)

4) -14.05 Delaware Investments Arizona (VAZ)

5) -13.98 DTF Tax Free Income (DTF) - utilities/public works

6) -13.97 Nuveen New York (NUN) - 100% AAA

7) -13.93 Putnam Municipal Opportunities (PMO) - 20% hospitals

-13.78 Nuveen Florida Investment Quality (NQF) - 80% AAA

9) -13.69 Eaton Vance Michigan - 54% AAA

10) -13.67 Nuveen Florida Quality Income (NUF) - 75% AAA