The Rieger Report: Boring is good! Municipal Bonds Return 9.26% in 2014

The Rieger Report: Boring is good! Municipal Bonds Return 9.26% in 2014

The municipal bond market steadily marched upward in 2014 and the S&P Municipal Bond Index ended up 9.26%.  The main ‘drama’ during the year came from the Detroit bankruptcy proceedings and wild swings of prices of bonds issued by Puerto Rico. Overall, low new issue supply and relatively attractive tax-free yields certainly helped keep the supply demand equilibrium to the demand side. Investment grade municipal bonds tracked in the S&P National AMT-Free Municipal Bond Index returned 8.92%.  In comparison, the S&P U.S. Issued Investment Grade Corporate Bond Index recorded a 7.71% return. The S&P Municipal Bond High Yield Index returned it’s third highest return in 16 years ending up 14.6%.  Junk corporate bonds tracked in the S&P U.S. Issued High Yield Corporate Bond Index returned 2.65%.  The tailwind for high yield municipal bonds was fueled by rebounds in both the Puerto Rico bond market and the tobacco settlement bond sector.  The S&P Municipal Bond Puerto Rico General Obligation Index was up 15.27% and the S&P Municipal Bond Tobacco Index returned 16.15%. Illinois wrestled with its pension obligations all year making headlines but it is general obligation bonds from New Jersey that underperformed the overall market.  The S&P Municipal Bond New Jersey General Obligation Index returned 3.7% significantly behind general obligations of other large issuers such as California (10.59%) , Illinois (9.63%) and New York (6%). Not a bad year for municipal bonds.  Boring is good.

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About AIWMI

The Association of International Wealth Management of India (AIWMI) is a not-for-profit organization and a globally recognized membership association for finance professionals. AIWMI primarily focuses on the broad and strategic role of developing a more robust and forward-looking training infrastructure for the financial services sector and to promote more active industry involvement and collaboration in training and continuing education. AIWMI is offering advanced international certification programs along with a wide variety of high-quality executive education programs. AIWMI programs combine state-of-the-art knowledge and skills with practical experience and insights into the functioning of the financial sector. All AIWMI courses and educational events have an intense and pragmatic curriculum. Participants are exposed to the latest developments within the financial services sector. AIWMI plays a key role in guiding the development of the financial services sector. AIWMI works with key industry participants’ viz. the Government, the Regulators, the Industries/Associations, the Corporate, the Media and the General Public to achieve its objectives. Besides enhancing technical competence and professionalism in the industry, AIWMI organizes events and facilitates discussions to promote best practices in leadership and talent development in the financial sector with an aim to become Asia’s premier center of excellence for financial education.

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