Insured municipal bonds are outperforming general obligation debt as investors place more value on guarantees amid falling bond prices and default concerns sparked by Detroit’s bankruptcy.

The yield on uninsured 30-year AAA-rated debt is climbing closer to that on similar insured credit, narrowing the gap between the two to the smallest since April 2011, Bloomberg data show. Yields on the AAA debt jumped 128 basis points from May, while they climbed just 56 basis points on insured debt. A less extreme version of the trend can be seen in Thomson Reuters data, where yields on 10-year A-rated GOs have climbed faster since January than on corresponding insured scales.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.