this is a special invest talk best of caller questions compilation program remember the invest

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will be played and answered on an upcoming invest talk podcast we're going to talk to don from

orinda california are you doing don hi there really well i have a bond that was just called and so i now

have some money i'm going to need need to reinvest in some bonds.

And I have another one maturing at the end of July that I'll once again have to deal with having to reinvest it.

Would you recommend going with non-callable bonds as I'm trying to replace these, considering rates may be coming down?

Well, if you have bonds that are callable, they, yeah, they can be replaced if rates drop considerably.

Now, the bigger question is, will they have the ability to refinance at lower

rates? Just because the Fed cuts rates does not necessarily mean that bond rates on the

corporate side will fall commensarily. Remember, that's just the short end. And most bond issuance

happens at least four years out you know three to

four in that range and oftentimes you know five six seven 10 years out and beyond so there's no

guarantee that rates on the those maturities will fall dramatically especially if if lower bond, lower Fed funds rate,

shall we say, sparks a further decline in the dollar and worries about inflation, et cetera.

I can see the yield curve steepening dramatically in that sense.

So, you know, I would focus more on, I'd be fine with a callable bond. I don't

really have a lot of issues with that because they don't necessarily think that it's going to

be something that is a huge risk going forward. Now, it does depend on the the name it depends on what rate it's it's

paying uh et cetera obviously if that coupon rate is very high then yeah maybe i would avoid

a callable uh note on for for with a high coupon but if it's around four or five percent or so

in that range six percent i probably wouldn't be

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