BlackRock Favors Long-Maturity Munis Seen as Cheap to Treasuries

BlackRock Inc. (BLK), the world’s largest asset manager, is looking to buy longer-dated municipal bonds on the view that those securities are cheap compared with federal debt.

The Federal Reserve’s plan to scale back its monthly bond purchases will push up interest rates in intermediate maturities, Rick Rieder, co-head for Americas fixed income, said in an interview with reporters yesterday at BlackRock’s New York headquarters. The company oversees about $4.3 trillion.

City and state bonds maturing in about 20 years as well as those due within two years offer the most value in 2014, said Sean Carney, a municipal strategist at the firm. The company sees less opportunity in bonds maturing in a range of about three to 10 years, he said.

Benchmark 30-year munis yield about 3.94 percent, compared with 3.67 percent for similar-maturity Treasuries, data compiled by Bloomberg show. The longest-dated munis have earned about 3.1 percent this year, better than any other maturity segment, S&P Dow Jones Indices show.

To contact the reporter on this story: Michelle Kaske in New York at mkaske@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Mark Tannenbaum, Mark Schoifet

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