"Minnesota residents have always loved their Minnesota munis," he said. "The state tax rate is high and there’s some good credits there. When the SALT cap kicked in in 2018, just as it drew more California residents to California bonds and New Yorkers to New York bonds, the same effect is happening there."
Hard to Find
Still, Minnesota’s 5.6 million residents face a smaller market of debt to invest in than residents in other high-tax areas. The state only had about $8.2 billion in net tax-supported debt in 2017, while California had almost $87 billion and New York $60.6 billion, according to Moody’s Investors Service.
White said it can be tough to find deals that offer extra yield, with Minnesota rated AAA by S&P Global Ratings. Its 10-year state general-obligation debt trades close to other top-rated securities, according to data compiled by Bloomberg.
School districts, a dominant type of Minnesota debt issuer, also tend to be high quality credits, he said. "It’s a challenge," he said.
This article was provided by Bloomberg News.