Colby is a Senior Municipal Strategist with more than 30 years of fixed income experience, responsible for Market Vectors municipal bond investments.
Governmental issuers of municipal bonds will continue under scrutiny as long as unemployment remains above 8% and the soft housing market continues. This focus is warranted due to concerns over muni bond price declines for issuers struggling with economic recovery.Although overall municipal credit quality remains strong, muni issuers in selected areas continue to face budget pressures and revenue headwinds. When muni bonds drop in price, reflecting investor anxiety, the cost of government capital rises. For example, Rhode Island is an Aa2 and AA credit, but the state continues to lag in key recovery metrics. A downgrade to single A could mean an additional 30 to 40 bps in the state's interest cost.Currently, only a few states are on negative credit watch. Moody's† has nine states, but S&P has just two and Fitch five. Conversely, S&P has three states on positive credit watch, Fitch two and Moody's none. California (A1, A-, A-) and Illinois (A2, A+, A) are the only states rated less than Aa quality, with Puerto Rico also in this category. Investors can take comfort in knowing that the great majority of state issuers are at least Aa and, in my opinion, they will continue to contribute positively to investment portfolios. At the state level, we are far from the point where the word "default" belongs in intelligent discussion.
†Moody’s Investors Service, Fitch Ratings, and Standard & Poor’s are third-party rating agencies that assess the credit quality of municipal and other bonds.
Market Vectors High-Yield Municipal Index ETF
Market Vectors Intermediate Municipal Index ETF
Market Vectors Short High-Yield Municipal Index ETF
Market Vectors CEF Municipal Income ETF
666 Third Avenue
New York, NY 10017
ETF Fund shares are not individually redeemable and will be issued and redeemed at the NAV only through certain authorized broker-dealers in large, specified blocks of shares called "creation units" and otherwise can be bought and sold only through exchange trading. Creation units are issued and redeemed principally in kind. Shares may trade at a premium or discount to their NAV in the secondary market.
Investing involves risk, including possible loss of principal. An investor should consider investment objectives, risks, charges and expenses of the investment company carefully before investing. The prospectus and summary prospectus contain this and other information. Please read the prospectus and summary prospectus carefully before investing.