As a result, the current muni bond environment has investors demanding higher interest rate premiums to cover the perceived risk in the markets.

For more information on municipal bonds, visit our municipal bonds category.

Year-to-date, the three Build America Bond ETFs – PIMCO Build America Bond Strategy (NYSEArca: BABZ), PowerShares Build America Bond Portfolio (NYSEArca: BAB) and SPDR Nuveen Barclays Capital Build America Bond (NYSEArca: BABS) – have been fairly flat, though all three yield around 5.8%.

Max Chen contributed to this article.