Bond refunds bad news for investors. (municipal bonds)

There's a flood predicted to engulf America Wednesday (July 1) that could wash away some investors, particularly retirees.

Market analysts are pointing to Wednesday as a watershed day in the history of municipal bonds because $6 billion, the largest amount ever, will be refunded that day.

The bonds were sold a decade ago when cities were paying as much as 14 percent in annual interest to borrow money to build infrastructure ranging from roads to parks.

The market rate is now closer to 3 percent to 5 percent, driving those municipalities to invoke clauses that allow the 20-year bonds to be refunded, or paid off, in 10 years. The cities then resell the bonds at the cheaper interest rate, saving millions of dollars.

In Austin, the city recently refinanced $265 million in bonds used for water, wastewater and electric construction. The move is predicted to save $12.5 …