Brian Chappatta, Columnist

Forget Bitcoin or Tesla. Muni Bonds Are the King of Costly.

State and local debt has become arguably the most expensive asset class anywhere.

February 22, 2021 at 10:30 AM UTC

Brian Chappatta is managing editor of Bloomberg News' leveraged finance and distressed debt teams. He was previously managing editor and team leader of its wealth group. Before that he was a Bloomberg Opinion markets and finance columnist and a bonds reporter for Bloomberg News.

Local debt takes the crown.
Photographer: Anders Wiklund/AFP/Getty Images

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Believe it or not, the $3.9 trillion municipal-bond market and Bitcoin have much in common.

A flood of money pouring in? Check: Muni bond funds added about $2 billion in the week ended Feb. 17, according to Refinitiv Lipper US Fund Flows data, building upon a $2.6 billion inflow in the prior period that was the fourth-largest on record. Scarce supply? You bet: Some analysts estimate that states and cities in 2021 will bring to market the smallest amount of tax-exempt bonds in 21 years. Fiscal stimulus supporting its case? Indeed: The prospect of $350 billion in aid to state and local governments should help stave off any widespread credit stress.