Municipal bond investors worried about the risk of default may be looking in the wrong direction.

Sure, investors were spooked by Meredith Whitney's prediction in December 2010 that the muni market would see hundreds of billions in losses. But now, they don't see what is actually a much greater risk on the horizon, according to Priscilla Hancock, a J.P. Morgan Asset Management client portfolio manager and fixed income strategist with a specialty in municipal bonds.

While the vast majority of traditional, plain-vanilla muni bonds carry virtually no risk of default, the real danger lurking in muni bonds comes from low-quality, high-yield municipal bonds, Hancock said Wednesday in a phone interview.

Complete your profile to continue reading and get FREE access to BenefitsPRO, part of your ALM digital membership.

  • Critical BenefitsPRO information including cutting edge post-reform success strategies, access to educational webcasts and videos, resources from industry leaders, and informative Newsletters.
  • Exclusive discounts on ALM, BenefitsPRO magazine and events
  • Access to other award-winning ALM websites including and

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.