Morningstar begins research on muni bonds

Morningstar Inc. has added individual municipal bond research to its repertoire.

The mutual fund research specialist said last Monday that it has launched analyst research on more than 100 muni issuers and on about 1 million muni bonds.

The muni issuer reports will be updated annually, at the least, and according to market events.

The bond reports will be updated daily with trade information, financial and economic data.

The research will be available to broker-dealers and financial advisers in the Morningstar Research Center.

“The importance of analyzing the credit risk of municipal bonds has taken on a new significance since the financial crisis,” said Jeff Westergaard, director of muni analytics at Morningstar. “Before, the credit quality of municipals was kind of taken for granted by investors.”

The credit quality of muni bonds has taken center stage recently because of a spate of bankruptcies in California. San Bernardino, with a population of more than 200,000, became the third California city in the past month to file for bankruptcy protection or authorize such a filing.

Despite a recent slew of headlines about municipal defaults, the actual numbers haven’t increased significantly, Mr. Westergaard said.

“The apocalyptic predictions haven’t come through to any extent,” he said. “Any kind of systematic failure isn’t likely at all.”

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