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Non-Rated Municipal Bonds Default 10 Times As Often As Rated Bonds
About 15% to 20% of the money invested in municipal bonds goes into bonds that are not rated or are rated below investment grade.
Despite that small share of the market, non-rated bonds accounted for 85% of the muni bond defaults (with total principal in the amount of nearly $10 billion) during the 1990s. These non-rated bonds are about 10 times as likely as high-grade muni bonds to default.
Source: Wall Street Journal, February 16, 2001
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