NEW YORK (TheStreet) - Issuance of municipal bonds have steadily increased in 2015 and are up about 60% compared to 2014's pace, according to Jim Grabovac, portfolio manager for the McDonell Intermediate Municipal Bond Fund (MIMAX).

The current municipal bond market offers investors a "strong value" right now, Grabovac said. He also made the case that an increase in issuance has been a good thing for the municipal bond market. 

These bonds are especially attractive when compared to other bond assets, like Treasuries, he said. The U.S. economy has rebounded nicely over the past seven years, which has bolstered tax revenues, improved the housing market and has led to improved credit quality among municipal bonds. 

Because of the broad improvement in credit quality, Grabovac said investors aren't assuming too much risk for the yield that they're receiving in return. 

MIMAX Chart
McDonell Intermediate Municipal Bond Fund MIMAX data by YCharts

While Grabovac likes municipal bonds in general, he is fond of education bonds in particular. It's one of the highest yielding sectors in the muni market, he explained. Investors can get a better yield by buying these bonds, without sacrificing too much credit quality. 

Investors looking for educational municipal bonds should look for strong institutions with that are in demand. When they find these bonds, they should "uncover some very good value," he reasoned. 

And while some bond investors are fearful of a rate hike from the Federal Reserve, Grabovac says that on average, returns for municipal bonds are up by more than 5% two years following the last rate increase. 

He also noted that banks are holding more municipal bonds than they normally do, owning 13% currently compared to 7% back in 2007. It shows strong demand from institutional investors, as well as value in the municipal bond market, he concluded. 

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