However, with rates depressed, more states and cities are increasing spending to finance new projects. Consequently, the increased supply could pressure the muni bond market ahead.
For instance, New York issued 30-year sales-tax bonds at a 2.87% yield, its lowest borrowing cost in at least half a century. additionally, the state added $150 million of debt to the deal through reduced rates.
Municipalities across the U.S. have planned about $10.5 billion of sales for the next 30 days, the most in four weeks. [This Muni ETF Keeps Climbing]
“Munis are fully valued, overbought and potentially exposed to a backup, particularly if we get heavy supply over the remainder of the year,” Chris Alwine, head of munis at Vanguard, said in the article.
iShares National AMT-Free Muni Bond ETF
For more information on the munis market, visit our municipal bonds category.
Max Chen contributed to this article.