Surprise!: 2012 Was Another Good Year For Munis

Robust demand drove the muni market in 2012 as supply was unable to match demand for much of the year, said Peter Hayes, managing director and head of the municipal bond group at BlackRock Inc.

(Image: Bloomberg News)

The 20-Bond Index of 20-year general obligation yields fell to 3.29% by late November - the lowest level since 1965. December has seen a sharp reversal.

The debt crises in Greece and Spain left bond investors more concerned with the return of capital versus the return on capital, said Michael Pietronico, chief executive officer at Miller Tabak Asset Management.

Muni volume was up over 30% through the first 11 months of the year to $344 billion in 11,849 issues, according to Thomson Reuters.

Voter approval of tax increases in November helped boost California's credit outlook and demonstrated the difference between municipal and corporate credits, said Nat Singer, managing director of Swap Financial Group.

(Image: Bloomberg News)

Investors need to pay close attention to the credit quality of their holdings, said Tom Kozlik, director and credit analyst at Janney Montgomery Scott.

Credit is always a concern, said Jim Pass, managing director at Guggenheim Partners LLC.

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