Recent gloom about a possible wave of municipal bond defaults got a dismissive response from a panel of muni bond portfolio managers at the Morningstar Investment Conference in Chicago on Friday.
“The predictions of widespread defaults that are going to decimate municipal bond portfolios are completely preposterous,” said panelist Michael G. Brooks, senior portfolio manager at AllianceBernstein, as the discussion opened.
The panelists were Brooks; John Cummings, head of the municipal bond desk at PIMCO; and Lyle Fitterer, head of the tax-exempt fixed income team at Wells Capital Management. Moderating the discussion was Miriam Sjoblom of Morningstar.
Public anxiety about the muni market was stoked last December by a “60 Minutes” segment in which high-profile financial analyst Meredith Whitney (left) predicted “significant” muni defaults and “hundreds of billions” in losses for investors. That prediction brought a “collective gasp,” recalled moderator Sjoblom.