Investors often joke that municipal bonds are as exciting as watching paint dry.

But it’s no joke: Municipals are boring.

Reliability, it turns out, is a snooze fest.

Consider the data: Raymond James recently highlighted research from Moody’s Investors Service, which tracks thousands of municipal issuers. About 98.5% are rated investment grade, Aaa to Baa3, with most falling in the top two categories.

Over the past decade, investment-grade munis have performed exactly as expected 99.94% of the time – an extraordinary record – with no defaults in the Aaa or Aa categories.

“The overall performance record extends back 50 years,” the firm said. “That’s why bonds in general, and investment grade municipal bonds in particular, are wealth preservation assets: The return of principal, on time and in full, is a near certainty.”

Reliability is the real story

For context, the S&P 500’s annual volatility has averaged about 15% over the past century, with 20% market declines occurring every few years.

While corporate credit quality has generally remained solid, defaults occur far more frequently than in the municipal market.

Moody’s reported that the average probability of default for U.S. public companies reached 9.2% at the end of last year. Speculative-grade corporate bonds, according to Schwab, have seen 12-month default rates near 5% as of August 2025.

Even among investment-grade corporate issuers, long-term studies show that defaults, while uncommon, occur more frequently than in the municipal market.

The contrast underscores how municipal issuers, backed by taxation authority or essential-service revenues, maintain credit stability that corporate borrowers seldom match.

Municipal credits, by many accounts, remain in remarkably good shape. Goldman Sachs notes that most issuers still hold healthy reserves and have managed their budgets conservatively, leaving balance sheets stronger than they were a decade ago.

As we noted previously, the uptick in bond insurance reflects renewed confidence in municipal credit strength (“What Rising Municipal Bond Insurance Signals”).

That stability helps explain why defaults remain infrequent, even as higher interest rates and tighter credit conditions have challenged riskier segments of the corporate and Treasury markets.

At the same time, municipals continue to look attractive compared with Treasuries: 30-year tax-exempt AAA yields were recently 80% of comparable U.S. Treasuries, a level that has historically signaled solid relative value for long-term investors.

Demand reinforces that story, as investors prize stability while much of the financial world feels uncertain.

Boring builds wealth

Of course, no investment is completely immune to change. Markets shift, and history only goes so far in predicting what comes next.

But in a world where investors are conditioned to chase excitement – quarterly earnings, breaking news, the next big trade – municipals deliver something rare: Predictability. There’s no adrenaline rush in collecting tax-exempt income or principal on time, nut those steady outcomes are exactly what long-term investors depend on.

Investing’s biggest stories are often the least dramatic. Volatility makes news, but reliability builds wealth.

For many investors, that quiet strength – the kind that lets them sleep soundly at night – still lives in investment-grade municipal bonds.