Amid muni pall, Morningstar commences tax-exempt coverage

Morningstar Inc. has added individual municipal bond research to its repertoire. The Chicago-based mutual fund research specialist announced Monday that it had launched analyst research on more than 100 municipal issuers and on about 1 million municipal bonds. The municipal issuer reports will be updated annually at the least and according to market events. The bond reports will be updated daily with trade information, financial and economic data. The research will be available in the Morningstar Research Center, which is available to broker-dealers and independent advisers. “The importance of analyzing the credit risk of municipal bonds has taken on a new significance since the financial crisis,” said Jeff Westergaard, director of municipal analytics at Morningstar. “Before, the credit quality of municipals was kind of taken for granted by investors.” The credit quality of municipal bonds has taken center stage recently because of a spate of bankruptcies in California. San Bernardino, Calif., with a population of more than 200,000, became the third California city in the past month to file for bankruptcy. Mr. Westergaard said that despite a slew of defaults making headlines of late, the actual numbers haven't shown a significant increase. “The apocalyptic predictions haven't come through to any extent,” he said. “Any kind of systematic failure isn't likely at all.”