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Betting on Munis? Brace for Volatility: Credit Suisse Exec

There continues to be a ton of drama surrounding municipal bonds, but it "really depends on the client and there ability to tolerate levels of volatility in the muni market," Dagny Maidman, managing director of private banking USA at Credit Suisse Securities, told CNBC on Tuesday.

"I would still have municipal bonds as part of your portfolio. I'd own some things like MLPs (master limited partnerships). I'd own some senior secured loans, maybe a little high yield, and I would definitely own dividend producing equities," said Maidman.

"We're recommending our clients do not own mutual funds, municipal mutual funds, which is I hate to say it is part of the problem in the muni market, in terms of pricing, has been the redemption from mutual funds," she said, adding, "the market is such a different market then other markets."

"It's a little bit hard to see when you're gonna be able to have prices move back towards intrinisic value," she said.

There is a vast misunderstanding of how credit in the muni market works and the fact that you have 60,000 issuers and not everything is related, Maidman went on to say.

"There's still issues coming from the financial crisis and from the fact that not just the ratings agencies, which have actually done okay in this area of munis, but people don't trust them anyway. And then you got no insurer's," Maidman added.

"For the longest time municipal bonds had insurer's and so nobody understood anything about credit and they didn't care," she said.