Will May and June be good for munis?

MAY 14, 2012
• According to S&P: - Upgrades of muni bonds outpaced downgrades 121 to 83 in Q1 2012. - Credit quality in U.S. public finance appeared to stabilize overall in Q1 2012. - The gulf between stronger and weaker credits may grow in some sub-sectors. • Depending upon whose definition you use, between 6 and 17 issuers "defaulted" in Q1 2012, about the same number as in Q1 2011. • S&P revised its outlook to positive from stable for California — one of the three largest U.S. issuers of municipal bonds. • The Federal Reserve Board has clarified that the Volcker rule will not take effect until July 21, 2014. With flows continuing to favor municipals, BBB-rated munis are receiving recommendations as their spreads to investment-grade muni bonds continue to compress. Even in a rising rate environment, the less volatile BBBs have historically outperformed investment-grade munis and have provided a potential cushion to a diversified portfolio. Historically, May and June have been strong months for municipals due to reinvestment opportunities. Yes, I expressed that same theme at the end of 2011, but I continue to see some slack in new issuance, setting the stage for a continuation of the positive relationship between demand and supply. I still see some soft spots in the road ahead, specifically with some smaller, local municipalities, but with modest expectations, I believe we should be able to comfortably reach the end of next quarter. James Colby is the senior municipal strategist for Market Vectors ETFs.

Latest News

The 2025 InvestmentNews Awards Excellence Awardees revealed
The 2025 InvestmentNews Awards Excellence Awardees revealed

From outstanding individuals to innovative organizations, find out who made the final shortlist for top honors at the IN awards, now in its second year.

Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty
Top RIA Cresset warns of 'inevitable' recession amid tariff uncertainty

Cresset's Susie Cranston is expecting an economic recession, but says her $65 billion RIA sees "great opportunity" to keep investing in a down market.

Edward Jones joins the crowd to sell more alternative investments
Edward Jones joins the crowd to sell more alternative investments

“There’s a big pull to alternative investments right now because of volatility of the stock market,” Kevin Gannon, CEO of Robert A. Stanger & Co., said.

Record RIA M&A activity marks strong start to 2025
Record RIA M&A activity marks strong start to 2025

Sellers shift focus: It's not about succession anymore.

IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients
IB+ Data Hub offers strategic edge for U.S. wealth advisors and RIAs advising business clients

Platform being adopted by independent-minded advisors who see insurance as a core pillar of their business.

SPONSORED Compliance in real time: Technology's expanding role in RIA oversight

RIAs face rising regulatory pressure in 2025. Forward-looking firms are responding with embedded technology, not more paperwork.

SPONSORED Advisory firms confront crossroads amid historic wealth transfer

As inheritances are set to reshape client portfolios and next-gen heirs demand digital-first experiences, firms are retooling their wealth tech stacks and succession models in real time.