Animal Spirits Podcast Talk Your Book: Investing in High Yield Munis
9 snips
Jun 16, 2025 In this discussion, guest Steve Hlavin, a Portfolio Manager at Nuveen, dives deep into high-yield municipal bonds. He highlights unexpected improvements in municipalities' financial health and the complexities of investing in non-rated bonds. The conversation also covers liquidity challenges, innovative solutions like Interval Funds, and the importance of understanding tax implications. Steve urges investors to prioritize independent research and long-term strategies for navigating this intricate market.
AI Snips
Chapters
Transcript
Episode notes
Inflation and Policy Push Supply
- High supply in municipal bonds is driven by inflation increasing project costs and policy factors like potential tax exemption changes.
- Issuers rush to market amid fears of higher future rates, pushing record bond issuance.
High-Yield Munis Fund Infrastructure
- High-yield municipals mostly fund U.S. infrastructure projects with dedicated revenue streams rather than being "sketchy" credits.
- Risk lies in construction, ramp-up, and usage to generate revenue for bond payment.
Most High-Yield Munis Non-Rated
- Over 80% of high-yield munis are non-rated due to small size and speculative nature.
- Issuers avoid rating costs since bonds are sold to institutions doing their own research.