MainStay: Munis Remain Attractive, Beware Uninsured Puerto Rico Paper

Be wary and get bond insurance before stepping into Puerto Rico municipals, said David Dowden, Portfolio Manager for the MainStay Tax Free Bond Fund. Dowden added that demand for municipals remains high as institutions increase their investments and proprietary trading desks resurface. He said new bond issuance will surprise on the upside, but net supply will be negative for the fifth year in a row. Dowden said high grade municipal bonds with short to intermediate maturities will underperform. Finally, Dowden expects the tobacco sector to outperform as investors seek to maintain yield as existing higher coupons are called or mature.