Illinois Leads A+ Debt Poised to Rally on Yield Gap: Muni Credit
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Municipal bonds rated A+, four levels below the highest grade, are yielding the most compared with top-ranked tax-exempts since July and may rally later this year as demand for riskier debt grows, according to strategists at JPMorgan Chase & Co. and Morgan Stanley Smith Barney.
Yields on the 10-year debt rated A+ were 3.25 percent yesterday, about 1.07 percentage point more than top-grade municipal bonds, according to Bloomberg Fair Value indexes. The spread reached 1.11 percentage points on July 5, the widest since at least 1994, when the Bloomberg data begins.