On the other hand, investors can consider the db X-Trackers Municipal Infrastructure Revenue Bond Fund (NYSEArca: RVNU), the first ETF to focus exclusively on revenue bonds, or those munis that are supported by revenue from projects such as toll roads or bridges. [An ETF for Lower Risk in Municipal Bond Portfolios]
The ratings agency, though, argues that general governments are stabilizing as local governments rebalance operations. However, Moody’s warns that rising pension costs pose downside risks in some cities.
Moody’s also points out that one-year default rates still remain at an average low of 0.03% for the past five years, compared to the 0.01% average for the 1970 to 2007 period. Moody’s rates approximately 15,700 municipal issuers.
“Looking ahead, our outlook for state and local governments is stable, but downside risk will persist in some places,” Al Medioli, the Moody’s Vice President, Senior Credit Officer, said in a press release. “This reflects a sluggish and uneven recovery, economic stress on households, demographic trends, and growing pension liabilities.”
For more information on the munis market, visit our municipal bonds category.
Max Chen contributed to this article.