Muni Bonds in California Get Expensive Amid Flurry of Demand (1)

Municipal bond investors are clamoring for tax-free debt sold by California issuers.

That demand is benefiting borrowers across the state — even ones without AAA credit ratings.

In general, US state and local government debt has gotten more expensive this year, with the 10-year muni benchmark offering about 64% yield on similar US Treasuries, as the asset class attracts new money. That dynamic is especially pronounced in California, where investors turn to municipal bonds as a refuge from high state income taxes.

So far this year, muni bond funds have seen more than $18 billion of inflows, the third highest ...