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

FINRA suspends Centaurus broker who piled clients into REITS, BDCs
FINRA suspends Centaurus broker who piled clients into REITS, BDCs

Most firms place a limit on advisors’ sales of alternative investments to clients in the neighborhood of 10% a customer’s net worth.

Advisor moves: LPL Financial, Osaic, Raymond James all welcome new teams
Advisor moves: LPL Financial, Osaic, Raymond James all welcome new teams

Those jumping ship include women advisors and breakaways.

Mariner announces an acquisition double, adding $1.7B to its AUA
Mariner announces an acquisition double, adding $1.7B to its AUA

Firms in New York and Arizona are the latest additions to the mega-RIA.

Michigan insurance agent to stand trial after charges of insurance fraud
Michigan insurance agent to stand trial after charges of insurance fraud

The agent, Todd Bernstein, 67, has been charged with four counts of insurance fraud linked to allegedly switching clients from one set of annuities to another.

NY Appeals court tosses $500M civil fraud penalty against Trump; upholds injunctive relief
NY Appeals court tosses $500M civil fraud penalty against Trump; upholds injunctive relief

“While harm certainly occurred, it was not the cataclysmic harm that can justify a nearly half billion-dollar award to the State,” Justice Peter Moulton wrote, while Trump will face limits in his ability to do business in New York.

SPONSORED How advisors can build for high-net-worth complexity

Orion's Tom Wilson on delivering coordinated, high-touch service in a world where returns alone no longer set you apart.

SPONSORED RILAs bring stability, growth during volatile markets

Barely a decade old, registered index-linked annuities have quickly surged in popularity, thanks to their unique blend of protection and growth potential—an appealing option for investors looking to chart a steadier course through today's choppy market waters, says Myles Lambert, Brighthouse Financial.