Yield-Starved Investors Snap Up Muni Bonds

A $34 million Illinois bond rated triple-B minus—at the bottom of investment-grade—and due in 10 years recently traded for around 128 cents on the dollar, according to data from Electronic Municipal Market Access. It yielded 1.86%, down from 2.22% when issued in March.

“There are just far more lenders than there are borrowers,” said Matt Fabian, head of research at Municipal Market Analytics. “That keeps municipal-bond yields pinned as low as you can go.”

The average yield on 10-year triple-A-rated munis was 0.82% at Friday’s close, according to Bloomberg Barclays data. That is less than 0.2 percentage point above the record low yield of 0.68% from February, in data going back to 1993. Yields fall when bond prices rise.

https://www.wsj.com/articles/demand-for-municipal-bonds-lowers-borrowers-costs-11620572580