Barron's [subscription required] summarizes the likely fate of different classes of Auction Rate Securities (ARS) holders -- the $330 billion market for securities that used to reset in weekly auctions before it froze up in February. It reports that If you hold ARSs sold by a municipality or a taxable, closed-end mutual fund you may already have gotten your money back or may do so within weeks. And those holding issues from tax-free, closed-end municipal-bond funds will likely see some money back before long. But others may have a long wait ahead.

I first wrote about this in February and since then, the post has accumulated 4,031 comments. I cannot imagine how difficult it must be for these people to think they had their money in a safe, money-market like fund -- only to discover that they could not get access to their money at all. It appears that many of these ARS holders did not receive a prospectus and were not warned that the auctions could fail.

Meanwhile, here's Barron's prognosis for the different classes of ARS holders:

• Municipal Issuers. Issuers like cities and toll roads had about $165 billion of the ARS market. Bloomberg estimates that north of $63 billion of municipal ARS have been refinanced, and that ARS holders were bought out without losing any money. About half of the municipal auctions are working again, with interest rates in the 4% to 5% area.

Continue reading Will Auction Rate Securities (ARS) holders get their money back?

Will Auction Rate Securities (ARS) holders get their money back? originally appeared on BloggingStocks on Sat, 24 May 2008 08:57:00 EST. Please see our terms for use of feeds.

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Analyst downgrades 8-07-07: CLWR, FFIV, JBLU and LUM originally appeared on BloggingStocks on Tue, 07 Aug 2007 11:05:00 EST. Please see our terms for use of feeds.