``We're telling everyone we can to sell Treasuries and buy munis,'' said Robert Millikan, who manages $5 billion as director of fixed income at BB&T Asset Management in Raleigh, North Carolina. State and local government bonds typically yield less than Treasuries because they pay interest exempt from income taxes, while bonds sold by the federal government don't.
Today's rally drove tax-exempt yields as much as 15 basis points lower from yesterday, traders said. A basis point is 0.01 percentage point. Top-rated 30-year general obligation bonds had risen to 5.01 percent yesterday, the highest since July 29, 2004, Municipal Market Advisors said.
Inflation may make this less of a good deal in the future, however. The other wrinkle is that these bonds will not be insured by bond insurers.
California Munis Show New Trend Away From Bond Insurance
Bond insurers generally allowed people to buy bonds without much concern about the underlying soundness of the issuer and the repayment process. What this means is that the investor must do their own due diligence.
No comments:
Post a Comment