With the ticking pension timebomb, I wouldn’t touch munis with a 10 foot pole.
The yields are starting to get interesting, IMO. I think there will probably be more pain, because the headlines and negative returns are leading to a snowballing redemption downward spiral, and other than retail there isn’t a natural investor base (which is why muni issuers loved BABs). But with high-quality issuers paying tax-exempt yields of 5-6% for long-dated debt, I’m starting to take a closer look.
Don’t get me wrong — there are profound challenges facing the state and local govts, so I would tend to steer clear of GO bonds, with the exception of high-character states like Texas. But bonds backed by the revenue of the NJ Turnpike, or some of the local bonds that are really corporate bonds in disguise, are starting to look attractive (as they say, gentlemen prefer bonds...)