BlackRock sees muni glass as half full

If municipal bond investors can stomach continued negative headlines — and some defaults over the next few months — they will find some compelling investment opportunities, BlackRock Inc. executives said last Thursday at a press gathering
MAR 31, 2011
If municipal bond investors can stomach continued negative headlines — and some defaults over the next few months — they will find some compelling investment opportunities, BlackRock Inc. executives said last Thursday at a press gathering. Specifically, the firm sees investing opportunities in debt issued by state and local governments, hospitals and higher education, as well as some water and sewer utilities. Municipal bond funds have suffered from $25 billion in net outflows over the past 14 weeks. Negative headlines will continue, said Peter Hayes, managing director and head of municipal bonds at BlackRock. “The headlines are going to continue to be negative over the next three to six months,” he said. Sparking those headlines will be some defaults, but they won't be widespread, said Joseph Pangallozzi, a director and credit research analyst on the municipal investment team at BlackRock. Year-over-year state revenue was up 7% as of the fourth quarter, according to the Nelson A. Rockefeller Institute of Government. “This is not an environment where you are going to see a cascade of defaults,” Mr. Pangallozzi said. There will be defaults in some areas, however, such as legacy manufacturing and midsize cities where the housing boom got out of control, he said. “You can guess that a good number of Florida dirt bonds will have problems,” he said. But there are also plenty of investing opportunities, Mr. Pangallozzi said. Specifically, BlackRock sees opportunities among state bond issuers. “There are 20 states pushing for pension reform,” he said. “None of the 50 states are going to default.” “The market is very broad,” he said. E-mail Jessica Toonkel at [email protected].

Latest News

SEC's quarterly reporting retreat meets an investor revolt
SEC's quarterly reporting retreat meets an investor revolt

The Investment Adviser Association, CFP Board, and the CFA Institute warn semiannual filings would widen information gaps and raise costs for advisors and clients.

Advisor moves: FiNet practice Merrit Point tucks in $1B Truist team in Florida debut
Advisor moves: FiNet practice Merrit Point tucks in $1B Truist team in Florida debut

Elsewhere, a Commonwealth team in Massachusetts converts to Cetera, while Janney draws four former Wells Fargo advisors to its Radnor, Pennsylvania office.

Trader used firm ties to freeze $3.6 million, investors allege
Trader used firm ties to freeze $3.6 million, investors allege

Clients say he copied the boss on his emails - and now they can't touch their cash.

CFTC alleges North Carolina fund manager faked profits, lost $8.6 million
CFTC alleges North Carolina fund manager faked profits, lost $8.6 million

He wired millions to his own accounts and told investors the fund was winning.

OnePoint BFG taps RISR as advisors chase business-owner clients
OnePoint BFG taps RISR as advisors chase business-owner clients

The partnership arrives as most small business owners near retirement age still don't have a formal succession plan in place.

SPONSORED Who builds the income when the pension disappears?

Dan Biagini of American Equity says the steady decline of pensions, longer lifespans and a reset in interest rates are rewriting how advisors build retirement income

SPONSORED Why direct indexing stopped being optional

Direct indexing is on pace to outgrow ETFs and mutual funds. Northern Trust's Ken Lassner explains why the advisors who get it wish they had started sooner.