FMD Capital Management

Thank Detroit: Muni bonds are a bargain

Written by Michael Fabian, August 15th, 2013

Despite what is happening in Detroit and what a certain blonde-prognosticating-analyst believes, investment grade muni bonds look relatively cheap at current levels.  I think we actually have to thank the talking heads in the financial media for their general negativity regarding munis, as they have turned what would have normally been a small blip in a very deep and expansive marketplace into a much larger concern.

Just like what occurred circa late 2010, where a selling frenzy unlocked one of the greatest opportunities to own tax free bonds since the depths of the financial crisis.  Here we sit once again with many municipal bond indexes on their lows, and tax equivalent yields on many highly rated issues above comparably rated investment grade corporate securities.

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