One concern that investors had during the recession was that the municipal bond market was going to run into serious problems, with many cities and other governments going into default on the bonds they had issued. In the past, these issues hardly ever defaulted: According to Moody's Investors Service, there was an average of 1.3 annual defaults in the muni bond market from 1970 through 2007.
And to be sure, the recession lifted those numbers somewhat, but not nearly as much as many investors feared would happen. In the past five years, the number of municipal bond defaults has increased, but only up to 4.6 per year.
And that number may even be slowing a bit, In 2012, there were only four defaults in the entire municipal bond market. So yes, it's true that the muni bond market has indeed become riskier since the recession, but that risk still appears to be small.
No comments:
Post a Comment