Hillary Flynn

Investors' ravenous demand for high-yield municipal bonds has created an optimal environment for lower-rated issuers, analysts say.

The value of municipal bonds plunged Thursday as the prospect of rising interest rates triggered a selloff, with short-term bonds taking the hardest hit.

Puerto Rico came to market with $3.5 billion of general obligation debt Tuesday, tapping the municipal bond market with GOs for the first time in two years.