Salient to Investors:

Build America Bonds are set to beat Treasuries and tax-exempt municipal debt for a third straight year – they offer an attractive yield to international buyers who don’t benefit from munis’ tax exemption.

Justin Hoogendoorn at BMO Capital Markets said the bonds are hard to find.

Concern that European leaders may fail to contain their debt crisis has fueled a U.S. fixed-income rally that has depressed interest rates in the $3.7 trillion muni market.

Jamie Iselin at Neuberger Berman said BABs will continue to offer favorable returns.

Moody’s said that from 1970 to 2011, an average 0.08 percent of investment-grade munis sold a decade or more earlier defaulted, versus 2.61 percent for investment-grade company bonds.

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