Morgan Stanley Says It’s Time to Trim Wagers on High-Yield Munis
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Investors should reduce holdings of riskier municipal-bond holdings after the strongest rally for speculative debt since 2009, according to Morgan Stanley.
Slowing bond issuance and demand for tax-free securities have pushed investors in the $3.7 trillion market toward higher-yielding assets as benchmark interest rates are close to 11-month lows. Junk-rated local debt has gained about 9 percent in 2014, the strongest start to a year since a 15.7 percent return in the same period of 2009, Barclays Plc data show. The broader market has rallied 5.7 percent this year.