WSJ’s Matt Wirz On Coronavirus Shutdown Stinging New Jersey Mall’s Bondholders
New Jersey’s American Dream Mall has been shut since March, and mutual funds that bought municipal bonds backing its construction have since taken hundreds of millions of dollars in paper losses. The troubles highlight the growing disconnect between ailing segments of the U.S. economy and the surge on Wall Street according to this revealing WSJ article
BondView’s COVID Impact Rating on these bonds reflects the market’s view of Very High Risk. See the details here.
The price of some of American Dream’s $1 billion in bonds fell to about 87 cents on the dollar in July 2020 after the mall’s owner, Triple Five, disclosed that the mall was losing tenants. The bonds had traded around 120 cents before the coronavirus struck the U.S.
Nuveen, which owned about $600 million face value of American Dream debt this spring, took paper losses of about $183 million on the investment from March through June, according to the WSJ. Nuveen portfolio manager John Miller has a long track record in high-yield muni bonds.
Here is a list of the other 32 mutual funds that own these bonds and which funds have been buying or selling the bond recently.
BondView Market Implied Rating on this bond is a low rated 1 star reflecting that the market is requiring a higher yield to compensate for the higher default risk.
So is this a COVID Opportunity bond worth owning or a disaster in waiting? For a deeper dive research opinion on this bond contact BondView.