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JUNE 6, 2005
Edited by Toddi Gutner EDUCATION Student Loans: Better Lock In That Rate If you're in college and want to lock in an all-time low rate on your student loans, refinance into a single consolidated loan now. On July 1 the rate on federally guaranteed Stafford Loans is expected to rise by roughly two points from today's 2.77%. By consolidating, you can get a fixed rate as low as 2.875%. Until now, only graduates have been eligible to do this. But some lenders are offering the option to current students who simply ask to start repaying their loans and then request a deferral on repayment until after graduation. The nation's largest student lender, Sallie Mae, requires borrowers to submit a signed consolidation application by June 30 (smartloan.com). Meanwhile, parents with federal Plus loans should also consolidate now, whether their children are still in school or have graduated. The Plus rate is at 4.17%, but a consolidated loan can lock in a rate as low as 4.25%. By Anne Tergesen MUTUAL FUNDS Time Bomb Bonds Two types of debt instruments making the markets nervous these days reside in many a mutual fund. While hedge funds are getting all the attention for owning esoteric, high-yielding collaterialized debt obligations, or CDOs, (Finance, May 23), plenty of mutual funds hold them, too. Meanwhile, tobacco revenue bonds could go up in smoke if cigarette makers stop making payouts to the states that issued them (BW -- May 23). We consulted eMAXX, Lipper's fixed-income database, for the 20 funds with the largest holdings of both bonds. (Go to businessweek.com/extras for the complete list.) Tobacco revenue bonds are staples in bond funds such as PIMCO Total Return and muni portfolios, including Nuveen Intermediate Duration Municipal Bond. Since CDOs can be quite risky, it's surprising that money-market funds own them, including First American Prime Obligations Fund (FIVXX ) and Nations Cash Reserves (NASX ). It turns out these particular CDOs tend to be high-quality and low-risk. Still, a default or blowup could nick the value of funds that hold either type of bond. So you're better off knowing if a fund you own has them. By Lauren Young   MUTUAL FUNDS Online Extra: Funds with Too Much Smoke? Tobacco revenue bonds (TRBs) could get snuffed out if cigarette manufacturers stop making payouts to the states that issued them (see BW, 5/23/05, "The High Cost of Nicotine Withdrawal"). We consulted eMAXX, Lipper's fixed-income database for the 20 funds with the largest holdings of TRBs. A default or blowup could harm funds holding these bonds. Here's a list of the firms with the biggest holdings, as well as the largest funds in the complex that hold this debt.
MUTUAL FUNDS Online Extra: CDOs in Mutual Funds Hedge fund are getting all the attention for owning esoteric, high-yielding collateralized debt obligations (CDOs) (see BW, 5/23/05, "Taking Risk To Extremes"), but plenty of mutual funds hold them, too. We consulted eMAXX, Lipper's fixed-income database for the funds with the largest CDO holdings. We were surprised to find many money-market funds on this list, but it turns out these particular CDOs tend to be high-quality and low-risk. Still, a default or blowup could nick the value of funds holding these bonds. Here's a list of the 20 largest funds with CDO holdings:
PHOTOGRAPHY Ready For Its Close-Up Cheap, single-use cameras are great to have when you've forgotten your regular one or want something to hand out to friends to commemorate special events. Here's one that's more flexible than most: The Kodak (EK ) Zoom, which retails for about $10, has a slide switch on the front that swaps the regular lens for one that magnifies your picture by a third -- nifty for when you want to get in a little closer on a shot or to crop out background clutter. By Larry Armstrong TIME OFF 1940s Architecture In Chicago To commemorate the 60th anniversary of the end of World War II, The Art Institute of Chicago has an exhibit highlighting 1940s architecture. Then, architects came up with clever housing solutions, including prefab construction, to meet demand from returning G.I.s. They envisioned a shimmering future with home heliports and curvy superhighways. The exhibit, 1945: Creativity and Crisis, Chicago Architecture and Design of the World War II Era, features the work of Mies van der Rohe, Richard Ten Eyck, and others. It runs through Jan. 8 (www.artic.edu). By Joseph Weber
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