Bill Gross Says Buy Muni Bonds

In an article posted on

Bill Gross of PIMCO says now is the time to be buying select municipal bonds, despite the potential for various defaults around the country. In an interview with CNBC Gross said that California and New York City are among the investments that will treat investors best, despite budget concerns in these states. "Despite the risk there's always the reward function, and you can get 6.65 percent in New York City Build America bonds, and 7 percent-plus in California," Gross said. "That's decent return relative to the admittedly higher risk these days." Gross helps Pimco run more than $1 trillion in assets under management as part of the world's largest bond fund. "Theoretically states have to balance their budgets, but they never do. They've been dependent on federal handouts...," Gross said. "Could or would states default? Not really." "They undoubtedly are dependent on some special legislation or some under-the-table benefits with Medicaid and with education programs going forward that the federal deficit will have to fund," he says. "Ultimately I think in 2011 I think we're going to see continued funding of the states."