|Hard to fathom isn’t it! With 2013 municipal bond default and bankruptcy headlines casting a dark cloud over the municipal bond market, defaulted bonds actually have been up. The overall performance of defaulted municipal bonds during this time has been positive as the S&P Municipal Bond Defaulted Index has returned a positive 2.79% year to date. Meanwhile, the investment grade tax-exempt market tracked in the S&P National AMT-Free Municipal Bond Index has seen a negative 2.85% return year to date. Sectors within the municipal bond market are each unique and have their own set of risks and that holds true for defaulted bonds. Some of those sectors are down significantly. Healthcare related bonds in default have been down over 8% year to date and multifamily bonds down just under 5%. These have been offset by a recovery of the distressed corporate backed municipal bond market of over 13% and land backed bonds in distress are up over 7.6%. The graphs and returns below detail the performance of several municipal bond sectors and the bonds markets in general.