Summary
- High yield sectors, whether in corporates or municipals, have elevated credit risk. With the economy finally re-opening, this is less of a concern.
- Despite less credit risk, high yield munis still face headwinds. They sit at elevated prices, and have plenty of interest rate risk.
- Despite the negatives, there are tailwinds for the space as well. Government revenue is improving, the income stream is higher than investment grade munis, and tax hikes may drive demand.
Seeking Alpha
Mar. 18, 202