High-Yield Municipal Debt Is ‘Overbought,’ Mosley Says

High-yield bonds issued by state and local governments, the best performers in the $3.7 trillion municipal market, are getting too expensive, said Bart Mosley, co-president of Trident Municipal Research.

“The high-yield part of the market is approaching overbought, if it’s not already there,” Mosley said at the State and Municipal Finance Conference hosted by Bloomberg Link in Chicago. “There’s more risk to underperformance now than there is opportunity for continuing to outperform.”

High-yield municipal bonds are debt typically rated below investment grade. They have returned about 9.4 percent this year, the most of any area in the market, according to Standard & Poor’s indexes. The overall market has gained about 3.8 percent, the index data shows.

To contact the reporter on this story: Brian Chappatta in Chicago at bchappatta1@bloomberg.net

To contact the editor responsible for this story: Stephen Merelman at smerelman@bloomberg.net

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