Everybody desires state and local-government bonds. That’s a excellent factor for those who already personal muni debt, and a nasty factor for those who’re looking to get your palms on some.

The yield at the S&P Municipal Bond Index this summer time fell underneath 1% for the primary time because it used to be created in 1998. The index tracks returns on a collection of core municipal bonds from around the marketplace and assumes any passion thrown off is reinvested. The yield in query—referred to as yield to worst—is the bottom charge the investor can be expecting to earn in need of a default.

Nonetheless, traders can’t get sufficient of the bonds. Costs have surged even if remarkable muni debt has swelled by means of greater than $100 billion within the yr ended March 31, consistent with Federal Reserve knowledge. Towns and states may just almost definitely promote an extra $89 billion in bonds with out meaningfully riding down costs, consistent with an research of lending capability by means of Municipal Marketplace Analytics. Bond yields upward push as costs fall.

“If you’re sitting on bonds that were issued three to five years ago I would ride it out,” stated Greg Zandlo, president of Minneapolis-based North East Asset Control. “It’s absolute gold.”

There are a number of components riding the surging call for in munis.

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