As some believe an economic slowdown is approaching, many investors have begun bowing out of high-risk bonds in favor of more conservative investments. But when it comes to high-yield, high-risk municipal bonds, investors continue to rush in, according to The Wall Street Journal.
Although these bond funds are essentially equivalent to corporate junk, they represent a $100 billion market. Unlike other municipal bonds, payment on these high-yield munis is not guaranteed by tax receipts. They often fund projects such as airports or health-care sites, and typically yield between 5% and 7%, tax-free.