Thursday, May 5, 2011

A Lack of Supply Feeds Rise in Munis

Thursday, May 5, 2011

The market for municipal bonds started the year in a tailspin, as investors who worried about shaky municipal finances and potential bond defaults pulled out of the market.

But, lately, muni-bond prices have been improving, as fears of widespread defaults have ebbed and the supply of new bonds has remained extremely low. The improvements have meant lower borrowing costs for some governments and also bring some hope to a municipal bond industry that has been buffeted by months of investor withdrawals.

Yields on a benchmark of highly rated 10-year general-obligation bonds, backed by a government's taxing authority, have fallen to ...

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