Debt of a Florida hospital rated three steps above junk bucked looming Medicare cuts to earn 15 percent tax-free in 2012, about seven times the gain on Treasuries and double the broader municipal market.
Barely a year ago, the municipal bond market was tarred as a horrible investment. The expiring taxable Build America Bonds program had triggered an uptick in new issues that created a supply glut, bond rates were on the rise and analyst Meredith Whitney told "60 Minutes" that defaults would amount to "hundreds of billions of dollars." From October 2010 through January 2011, municipal bond funds saw net outflows of more than $33 billion, while a benchmark municipal bond index fell nearly 5 percent.
Pacific Investment Management Co. is betting that Manhattanites like Annie Zhou will help pay down $3 billion of debt that is transforming a former West Side industrial area into a neighborhood with shops and offices.