Munis are hot right now: And there's plenty to go around

Data: Bloomberg data compiled by muni bond analyst Matt Fabian; Note: Includes new and refinanced debt; Chart: Emily Peck/AxiosHere's a surprising combination of words: Municipal bonds are sexy right now — offering historically attractive returns at a time when states and localities need more and more cash.Why it matters: That may be good news for investors, but it costs taxpayers who foot the bill when states and localities borrow money by issuing these bonds.Where it stands: A sell-off in municipal bonds in September, when interest rates began to rise, was the worst since the financial crisis. Now, yields, which move inversely to prices, are at historic highs.State and local governments have issued $611.8 billion in munis over the 52-week period ending Oct. 16, according to Bloomberg data compiled by muni analyst Matt Fabian, president of Municipal Market Analytics. It's a record high.How it works: Municipal bonds are used by states and localities to fund infrastructure — building your roads, bridges, schools and whatnot.They've long been appealing to investors because of the tax breaks. Nearly half of outstanding muni bonds are held directly by households or nonprofits, per Fed…

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