High-Tax States’ Bonds Are So in Demand That Ratings Don’t Matter
- ‘To boil it down, it’s 99.999% because of the SALT cap’
- California, New York yields holding below the AAA benchmark
Photographer: Patrick T. Fallon/Bloomberg
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There’s so much money chasing after the bonds sold by America’s high-tax states that buyers don’t seem to care too much about what credit-rating companies think.
The heavy demand overall has driven municipal yields to their lowest in more than six-decades. And with rates so low, the yield penalties that would typically differentiate a deeply indebted state from a thrifty one have become little more than rounding errors that in some cases contrast with their standing in the ratings pecking order.