Muni Bond Trade

The AA+/AAA 20-year muni bonds are trading above a 5% yield. That means more than 7% on a tax equivalent basis for top US earners!!!! There have been a grand total of 54 bond defaults in the past 4 decades and not one state default since the Depression. For those concerned over a wave of muni defaults, relax. My bet is that unions–not bond holders–will pay the piper and be forced into new less generous contracts.

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