In 2020, issuance has exploded mainly because a 2017 change in the tax law that prevents state and local governments from refinancing older high-rate muni debt in advance of their maturities with new tax-exempt bonds. Such refundings must now be done in the taxable market.
For regular investors, 3 major options are available to play in this sector. Below are some good candidates:
- BlackRock Taxable Municipal Bond Trust (BBN): yield 5.4%
- Guggenheim Taxable Municipal Bond and Investment Grade Debt Trust (GBAB): yield 6.2%
- Nuveen Taxable Municipal Income (NBB): yield 5.0%
- MainStay Mackay U.S. Infrastructure Bond (MGVAX): yield 1.6%
- Invesco Taxable Muni Bond (BAB): yield 2.6%
Taxable munis are well suited to retirement accounts as an exposure to fixed income.