vinyasa

Muni Bonds: Juicy Opportunity for Investors

Interesting thesis and there is no question states are in trouble but repayment risk? Not much on General Obligation bonds. The factor you overlook is that investors in munis look at tax equivelant yields which right now are near 8% on 5-10 year GO AAA bonds. Comparing that to the corporates it is very attractive although not without risks as some would believe. GOs are backed by taxing authority. The state would have to reneg on repayment and the feds would have to not back stop them for these to go under.

You may be right on more suspect revenue bonds for dubious projects but in general the risk reward on shorter term GO munis is pretty good.

I do own GO bonds directly ranging from 3-7 years and am getting nearly 8% AT yields.