Airline, Tobacco Holdings Put Drag On 1st-Q Earnings

Fine, Jacob
April 2003
Bond Buyer;4/9/2003, Vol. 344 Issue 31611, p6
Trade Publication
Municipal bond mutual funds with a lot of airline-related bonds suffered a setback during the first quarter of 2003. The airline sector of the Lehman Brothers High Yield Municipal Index tumbled 18.63 percent on a total return basis during the first quarter. The security behind much of those funds' airline-related holdings has come into question due to a legal challenge introduced during United Airlines Inc.'s Chapter 11 bankruptcy court proceedings that threatens to have facility lease provisions requiring bondholder repayment stayed. The tobacco bond sector was further hurt when on March 22, Altria Group Inc., parent company of Philip Morris USA Inc., was ordered to pay$ 10.1 billion in a lawsuit over light cigarettes by an Illinois judge. None of the six muni bond funds run by Thornburg Investment Management Inc. in Santa Fe, N.M., contains a single tobacco or airline-related bond, according to Josh Gonze, an assistant portfolio manager at the firm.


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