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Muni bond market set for worst year in almost two decades

  • Municipal debt is down 2.58% so far this year, putting the asset class on course for its worst annual performance since 1994. In contrast, muni debt provided a return of 6.78% last year and 10.7% in 2011.
  • Detroit's fall into bankruptcy protection has had a major effect, with problems in Chicago, Illinois and Puerto Rico adding to the downward pressure. There's also been a broad sell-off in bond markets as investors have prepared for Fed tapering.
  • However, municipal debt tied to real-estate development, which is known as "dirt bonds" and is fairly risky, has had a decent year amid the recovery in the housing sector, rising 1.1% through December 23.
  • ETFs: MUB, HYD, BAB, PZA, MUNI, TFI, ITM, MLN, HYMB, CMF, BABZ, XMPT, BABS, SHM, SUB, PRB, SMB, PZT, NYF, CXA, PWZ, PVI, SMMU, MUAF, INY, MUAD, MUAE, MUAG, MUAC, VRD, GMMB, RVNU
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Comments (6)
  • DeepValueLover
    , contributor
    Comments (8683) | Send Message
     
    Meredith Whitney was right but early.

     

    The laughter at her call isn't as strong as it used to be.
    26 Dec 2013, 04:24 AM Reply Like
  • bbro
    , contributor
    Comments (9851) | Send Message
     
    Data that Meredith Whitney was right? MUB BAB MUNI CMF are flat to slightly up since July 18th (Interest reinvested)
    26 Dec 2013, 07:58 AM Reply Like
  • DeepValueLover
    , contributor
    Comments (8683) | Send Message
     
    Until these municipalities either increase taxes, cut spending and/or get a judge that is willing to throw out obligations then Whitney was right.

     

    The piper must be paid before he goes away.
    26 Dec 2013, 04:28 PM Reply Like
  • TippingPoint
    , contributor
    Comments (152) | Send Message
     
    I agree. Muni crack-ups are always like slow motion train wrecks.....takes years for them to finally go kafluey, like Detroit, also Jefferson Co, AL. Chicago is the next Detroit, and the next recession could take down IL---last I heard the state was years behind in paying funeral homes for burying paupers. Making public sector pensions sacrosanct by putting them in the IL Constitution was really dumb.
    28 Dec 2013, 07:24 PM Reply Like
  • june1234
    , contributor
    Comments (2689) | Send Message
     
    As rates continue to rise don't expect 14 to make up for 13.
    26 Dec 2013, 05:47 AM Reply Like
  • TripleG
    , contributor
    Comments (479) | Send Message
     
    IL has an ongoing Gov election right now where they are finally talking about bond obligations and teacher pensions. The DEMocracy is trying to work things out. It's doubtful that they can make any number adjustments. As you said, its a slow train wreck.
    1 Jan, 09:54 AM Reply Like
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