Investors increased appetite for high-yield munis comes after last year’s Detroit bankruptcy, the largest U.S. municipal bankruptcy, Puerto Rico’s financial woes and a spate of municipal bankruptcies in California caused by crushing public pension obligations.
However, Puerto Rico was able to sell more than $3 billion in bonds last month. Investors like Puerto Rico debt because it is exempt from Federal taxes and local taxes in every state, whereas muni investors are only exempt from state taxes if they are filing in the same state as the municipal bond issuer. [Puerto Rico Readies New Muni Issue]
California and Puerto Rico combine for nearly a quarter of HYMB’s weight and 15% of HYD.
Market Vectors High Yield Municipal ETF
ETF Trends editorial team contributed to this post. Tom Lydon’s clients own shares of HYD.