1. You don't have to pay federal or state taxes on municipal bonds. So a 6% yield on a Muni bond is like a 8% yield on corporate bond once taxes are factored in.
2. Historically, the default rate on municipal bonds has been extremely low. The only losers in Munis tend to be those who invest in bonds designated for a specific project that goes bust. If you invested in bonds for a local water treatment plant or toll bridge that goes broke, you could lose money. But if you loan money for general purpose bonds, the default rate is very low.
Granted, neither of those is guaranteed to stay with us.
The federal government might change the tax status of muni bonds to cope with its yawning deficits. More states could find themselves wedged between tax-hating tea partiers and spending averse unionized teachers, unable to close their deficits. More local governments could become swamped by unpaid property taxes as foreclosures wreck the tax base.
In finance, things often look stable. Up until they collapse.