Bloomberg: Invesco's Paris on VRDNs
A video entitled, "Invesco Sees VRDNs as 'Very Good' Short-Term Muni Bond Strategy" interviews Mark Paris, head of municipals at Invesco. He joins Bloomberg's Taylor Riggs for this week's "Muni Moment" on "Bloomberg Markets." Paris was asked about VRDNs, or variable rate demand notes, which "recently hit a 10-year (yield) high." He comments, "Obviously, as the Fed is normalizing the short end of the yield curve, we're seeing short-term rates move up, and that's the same thing for the municipal bond market. These variable rate demand notes actually reset on a weekly basis. It's actually very good in the short-end strategy. Some of our shorter-end duration funds were using that strategy because the price/ stays very stable, the rates move up as the Fed moves.... The flip side is closed end funds which issue these, and there cost of funds is going up very slowly and that could put some pressure on dividends in closed end funds.... But for the short strategies, we like the VRDNs a lot." Asked about Detroit, he adds, "But it's very interesting to look at different names in the muni market and there's so many names to look at.... Revenue bonds do very well.... We're actually focused more on toll roads, water and sewer bonds. We think that's a very steady area of the market... You don't get the headline risk." Finally, when asked, "Where do you see opportunities?" Paris answers, "It definitely pays to take some credit risk here. Obviously, we've had a big rate move.... High-yield munis have outperformed.... I would say the short duration space in high yield muni is very attractive right now."
