In the current low interest rate environment, with tax deductions capped by the recent tax reform efforts, the value of the tax-exempt income from US municipal bonds has never been higher. Yet, with the reduced participation from the bond insurers, the municipal credit landscape has also grown more complex and more volatile. Every bond now has to be analyzed on its own merits. Even so-called "investment grade" credits can be subject to massive headline risk.
Despite the historically low default rate for munis, you can still lose money in munis if you own the wrong credits. Just ask the bondholders of Detroit, Puerto Rico and the State of Illinois. With only a few exceptions, the public pension funding crisis has yet to be reflected in bond prices. Nowadays, the "high yield" sector is more likely to include Chicago Public Schools and State of Connecticut than some stand-alone project financing.
At the same time, the rating agencies can no longer be relied upon to provide timely and dependable credit opinions. After all, they are paid by the very entities they are hired to rate. How objective can they ever be? These are the same outfits that rated Puerto Rico investment grade, right up until the time that island defaulted on its debt.
As a financial advisor, you have to wear many hats and juggle many different asset classes. In order to navigate today's municipal bond market on behalf of your clients and avoid all the land mines, you need independent, specialized research help.
Now for the good news: you can now have access to the same professional quality credit research that only institutional investors used to enjoy.
Our credit opinions are fresh, fiercely independent and most importantly, data-driven. Ours is not the traditional anecdotal approach to credit analysis, just straight, no nonsense research. Through our partnership with key technology firms, we can offer cost-effective, scalable portfolio surveillance solutions for wealth managers and RIAs.
Why wait for that frantic phone call from your client in response to some shocking headline? Contact us today and show your clients you're on top of their municipal bond portfolios.