Why High Yield Munis Default Less Than Corporate High Yield
2026-05-23·via All Articles on Seeking Alpha
Summary
Muni default rates have been a fraction of corporate high yield default rates across every major credit cycle.
The gap is driven by structural advantages: essential-service revenue streams, taxing authority, and political incentives to avoid default.
Lower default rates combined with tax-exempt income make high yield munis a potentially attractive risk-adjusted income option, in VanEck's view.
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High yield municipal bonds have historically defaulted at far lower rates than corporate high yield. The reasons are structural, and they hold up across credit cycles.
The Default Rate Gap: Munis vs. Corporate High Yield
