How can I redeem a municipal bond?
June 16, 2009 10:06 PM Subscribe
How can I redeem a municipal bond?
I have a Westmoreland County, Pennsylvania zero coupon municipal bond which was purchased for me when I was a child in 1987. It matures on July 1st of this year. Now here's the kicker: the bond is labeled as having been issued through Shearson Lehman Brothers. Since they're bankrupt, am I out of luck? Or can I redeem it directly through the county? Do I need to handle this through a brokerage?
I have a Westmoreland County, Pennsylvania zero coupon municipal bond which was purchased for me when I was a child in 1987. It matures on July 1st of this year. Now here's the kicker: the bond is labeled as having been issued through Shearson Lehman Brothers. Since they're bankrupt, am I out of luck? Or can I redeem it directly through the county? Do I need to handle this through a brokerage?
Best answer: I think BNY Mellon is the place. Based on your description, this sounds like the bond you are holding:
CUSIP: 961017BP4
Maturity: 07/01/2009
Coupon: 0.00
Descirption: WESTMORELAND CNTY SRVC SR K
posted by milkrate at 12:17 AM on June 17, 2009
CUSIP: 961017BP4
Maturity: 07/01/2009
Coupon: 0.00
Descirption: WESTMORELAND CNTY SRVC SR K
posted by milkrate at 12:17 AM on June 17, 2009
Rest assured that you can, in fact, redeem this. Municipalities use financial services firms to issue debut, but the ongoing viability of those firms does not directly affect your ability to redeem the bond. Bonds are backed by the entities which issue them, so unless the municipality itself goes bankrupt--which is rare but not unheard of--you should be able to redeem the bond.
If I remember correctly, you should be able to go to any commercial bank and redeem it. I've redeemed Treasuries at my local branch before. Bonds are a species of negotiable instruments, i.e. they can be freely transferred from person to person, in this case through the physical act of giving them the note. If you read the actual bond, it says something along the lines of "Westmoreland County promises to pay the Bearer..." meaning whoever holds the bond can redeem it on or after the date specified.
Basically, bonds not that different from a normal check; the main difference is that the promise to pay is delayed. Whereas a check essentially tells the bank to pay the specified person right now, a bond promises to pay the bearer a specified amount on a specified date in the future. Thus, once that date arrives, you should be able to treat it like a check, i.e. take it to your bank and cash it. It then becomes the bank's responsibility to seek reimbursement, something it does all the time anyways.
In short: take it to your bank and let them deal with it. That's what you pay them for.
posted by valkyryn at 4:58 AM on June 17, 2009
If I remember correctly, you should be able to go to any commercial bank and redeem it. I've redeemed Treasuries at my local branch before. Bonds are a species of negotiable instruments, i.e. they can be freely transferred from person to person, in this case through the physical act of giving them the note. If you read the actual bond, it says something along the lines of "Westmoreland County promises to pay the Bearer..." meaning whoever holds the bond can redeem it on or after the date specified.
Basically, bonds not that different from a normal check; the main difference is that the promise to pay is delayed. Whereas a check essentially tells the bank to pay the specified person right now, a bond promises to pay the bearer a specified amount on a specified date in the future. Thus, once that date arrives, you should be able to treat it like a check, i.e. take it to your bank and cash it. It then becomes the bank's responsibility to seek reimbursement, something it does all the time anyways.
In short: take it to your bank and let them deal with it. That's what you pay them for.
posted by valkyryn at 4:58 AM on June 17, 2009
Response by poster: Thanks everyone. After several phone calls starting at Westmoreland County I got to BNY Mellon which is indeed the right place. They told me that I have to send in a letter indicating my intent to redeem the bond, along with the certificate, my birth certificate (it's in custodianship) and a W9 form. The bond has to be "Medallion guaranteed" by a bank, which is basically a notary-like approval. Sounds like it will be a blast.
posted by jjno at 11:47 AM on June 17, 2009
posted by jjno at 11:47 AM on June 17, 2009
This thread is closed to new comments.
posted by milkrate at 11:39 PM on June 16, 2009