Municipal Bond Maze

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    The municipal bond market will likely see more volatility in 2011, and there may well be municipalities that default in the year ahead.

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    A spike in yields and a desire to diversify portfolios is prompting some unusual investors to jump into the municipal bond market, say traders and analysts.

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    States are caught in an extended fiscal squeeze caused by rising costs and lower tax receipts. In addition, the aid distributed by the American Recovery and Reinvestment Act of 2009, is pretty much used up.

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    While some experts see this as an opportunity, skeptics says it's a new financial crisis in the making and that muni bonds should be avoided.  Tell us what you think.

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    Imagine getting a bill for $1 trillion, or $3 trillion, with a due date  in the next 30 years.  This is a situation faced by all 50 states, whose pension funds are underfunded by $1 to $3 trillion, depending on whose estimates you believe.

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    Savvy investors are looking at the muni market and the state debt crisis a little differently. Iinstead of looking at the number as a whole, they break it down into its pieces and see both a far more manageable problem than is seen by those who gross up the problem and opportunities.

  • Retired police and firefighters have agreed to pension cuts in  Central Falls Rhode Island's municipal bankruptcy. It is  the first municipality to shed pension obligations in the bankruptcy process,the New York Times reports.

  • PIMCO's Gross Bullish on Munis

    Bill Gross, co-CIO of PIMCO, tells CNBC why he thinks muni bond yield returns are attractive.

  • Making Money in Munis

    Discussing whether it's a good time to get into muni bonds, John Miller, Nuveen CIO & muni bond portfolio manager, and Michael Darda, MKM Partners chief economist.

  • Muni Bonds: Worth the Gamble?

    Why more voices say trouble is brewing in the muni bond market, with Richard Ciccarone, McDonnell Investments, and Peter Kaufman, Gordian Group.

  • Muni-Bond Fear Factor

    Discussing whether Meredith Whitney's predictions on the muni bond market are overblown, with Thomas Doe, Municipal Market Advisors CEO, and Doug Dachille, First Principles Capital Mgmt. CEO.

  • US Muni Bond Market Volatility

    Bankruptcy is not an option for US states, Gov. Jack Markell of Delaware told CNBC. "Rather than bankruptcy, I think what states really need is electred officials who are willing to make tough decision," he said.

  • Municipal bonds are issued by a city, local or state government and have long been identified as among the safest investment options in the country. However, for some local governments, the financial crisis has caused revenue to drop and bond payments less likely to occur than originally thought. has obtained from  the lowest rated American municipal bonds that the agency covers, which are the bonds that carry the highest probability of defaulting on debt payments. None of the debt cove has obtained from Fitch Ratings the lowest-rated American municipal bonds that the agency covers, which are the bonds that carry the highest probability of defaulting on debt payments.

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    If you go by some recent notable analysts' reports, we are headed for a municipal bond crisis to rival the financials' collapse of 2008. This doomsday prognosis is simply overblown, and here's why.

  • Meredith Whitney

    In an interview broadcast on “60 Minutes” Sunday night, Whitney, who runs the Meredith Whitney Advisory Group, argued that the $3 trillion municipal bond market faces the immediate threat of hundreds of billions of dollars in defaults. That notion has put the investment community on the defensive Monday, as bankers and analysts scramble to reassure investors and clients that the market isn’t about to fall to pieces.

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    To be clear, I'm not saying the muni market today offers the same opportunity as it did in 2008, during the heart of the credit crisis. But it now presents a fantastic opportunity for those looking to generate tax-free income, and here's why.

  • Ben Thompson

    Notable analyst Meredith Whitney created a lot of buzz defending her prediction that the $3 trillion municipal bond market faces the immediate threat of hundreds of billions of dollars in default.  "The hundreds of billions of dollars is really the issue," Ben Thompson told CNBC  on Wednesday.

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    America is now officially worried about a municipal bond meltdown. In a piece called ‘Day of Reckoning,’ CBS 60 Minutes showcased financial analyst Meredith Whitney’s bold prediction that we will see “50 to 100 sizable [muni] defaults...more. This will amount to hundreds of billions of dollars of defaults.” It’s a frightening forecast.

  • Los Angeles, CA

    Although current law does not allow states to go bankrupt, some experts believe it should be permitted so the federal government can avoid bailing out states faced with massive budget shortfalls and the end of stimulus funds in 2011.

  • Meredith Whitney

    Financial analyst Meredith Whitney is sticking by her call that the nation's municipalities face a wave of defaults, despite a wave of criticism over her prediction that hundreds of local governments would not meet their obligations.