Markets

While younger investors are often risk-takers seeking high returns in the fast-paced equity market, owning municipal bonds can be an important part of a young entrepreneur's investment portfolio, municipal strategists said.

The evolving understanding of climate change poses challenges in evaluating and disclosing municipal securities risk, said panelists at The Bond Buyer's California Public Finance Conference.

The most-traded P3 bonds have rallied this year, and retained gains since the Sept. 22 bankruptcy filing by the manager of the Indiana Toll Road.

Rather than getting yield by buying in the longer-middle to back-end of the curve as barbell investors typically do, Newtown Square, Pa.-based Veritable is purchasing bonds maturing from five to seven years for the long end of its barbell.

While municipal volume is expected to be just above $5 billion this week, traders say with a substantial amount of those bonds being issued as taxable, supply suited to traditional muni investors will be closer to $4 billion.

Muni managers and analysts say the absence of retail participation in the muni market has been palpable and that the net negative supply, historical low municipal to Treasury ratios, narrow spreads, and headline risk are contributing to the pull back.

The weekly average yield to maturity of the Bond Buyer Municipal Bond Index, which is based on 40 long-term bond prices, dropped three basis points in the week ending October 2 to 4.40%.

California's water utility sector is maintaining a strong credit profile, despite pressures from the state's ongoing drought, according to market participants.

Citigroup said in an interview the sell-off in tobacco bonds caused by Bill Gross' departure from PIMCO will be short lived.

The Thornburg Limited Term Municipal Fund began with just $12 million of total assets under management and 30 years later has grown to $6.8 billion.