["Tastes Great - Less Filling!"]  ["Municipalities going bankrupt. - Can't believe everything you read!"]

With the noise to his back, the Chief Investment Officer for Goldman Sachs Private Wealth says high net-worth investors should look past negative headlines and invest in high-rated muni debt:  "Munis are trading at the same yield levels as treasuries on a pre-tax basis ..."

Sharmin Mossavar-Rhamani says now is the time, particularly for clients with a 1-2 year horizon.   Muni bond yields rose sharply at year's end, pushed by a massive wave of selling.   The muni bond market began to weaken in the fall, as interest rates rose, along with a heavy supply of debt issuance ahead of the year-end expiration of the Build America Bonds ("BAB") program.

In late December, Meredith Whitney declared on "60 Minutes" that the market could face 50 to 100 "sizable defaults", and that made the market extremely bearish.  But many muni bond analysts say Ms. Whitney's prediction is fundamentally flawed, and that fear over defaults has been overblown.

"States are making severe cutbacks in spending for the first time in 30 years. There will be cutbacks that really hurt, but that’s not the same as a bond default."

    Citigroup Also Recommends Munis.   Citigroup likes investments in high-quality rated bonds, in part because pension funds and insurers have begun to invest in those types of munis, providing stability to the market. 

On the flip side, Ms. Mossavar-Rhamani explains:  "There is a whole other universe - 20-30% of the muni market that is not rated."  Those areas are to be avoided. 

To continue reading, click onto:   [CNBC.com, 2/14, "Key to Muni Bonds ..."]