BLE - High And Tight: Investment Options For A Rich Muni Market
This article was originally published a few weeks ago, so some metrics may be out of date, in particular, fund discounts have since tightened and yields have compressed.
Municipal CEF investors find themselves at the intersection of two market trends - first, a strong run-up has resulted in high prices and tight valuations, and secondly, high leverage costs and low long-term yields have limited both carry and reinvestment opportunities resulting in continued distribution cuts.
We think this market environment provides two options for investors who would like to mitigate these trends while maintaining muni exposure.