Municipal bonds serve a variety of important purposes for our institutional and insurance company portfolios

Our Municipal Bond Strategy

We employ both a top-down and bottom-up analysis of the municipal bond market and assign an improving, stable, or declining status to the 12 Conning-defined municipal sectors we cover.

Complementing our municipal sector analysis, we use our proprietary, bi-annual State of the States credit analysis to rank the states. This model relies on indicators that we believe can predict long-term credit quality. Our methodology creates rankings that we use as a tool to help us make relative value investment decisions among similar credits located in different states. Having a quantitative, forward-thinking model to rank state credit quality eliminates biases that might migrate into our analysis.

 

 

Benefits

Municipal bonds serve a variety of important purposes for our institutional and insurance company portfolios. First, they typically provide a tax-adjusted yield advantage over other fixed income asset types. Second, they have a much lower default rate than equally rated corporate bonds. Third, they provide diversity to fixed income portfolios. This diversity includes credit risks in states, local governments and government enterprises, such as utility systems, universities, and transportation projects. Fourth, by selecting bonds in specific sectors and states, investors can counterbalance risks taken in their normal course of business.

 


Our Municipal Bond Expert

Paul Mansour

Head of Municipal Credit Research

paul.mansour@conning.com