Muni bonds defy doomsday predictions

12/23/2011 | Wall Street Journal, The

Municipal bonds have returned 10.2% in 2011, outperforming Treasurys and riskier high-yield corporate bonds, according to Barclays Capital. The results defied forecasts that a wave of defaults was likely. Muni bonds "got beat up at the beginning of the year, so we were starting from a low base," said Rafael Costas, co-director of the municipal-bond department at Franklin Templeton. "As the year went on, people realized all these terrible predictions were not coming to pass. Things were not as bad as people were making them out to be."

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