While the Puerto Rico municipal bond market saga continues the damage it has done has been significant. Puerto Rico municipal bonds represent approximately 23% of the market value of the S&P Municipal Bond High Yield Index. The impact on total returns of this segment of the market have been dramatic. The table below illustrates the performance with and without Puerto Rico. High yield municipal bonds have actually had an excellent year in total return of over 6%, that is when you exclude Puerto Rico exposure. Happy to send the time series of data on both indices to those interested in diving deeper.
The chart below shows performance over time of the two indices both reset to 100 as of November 2011.
Chart 1: Select Municipal Bond Indices Total Return Index Levels