Dramatic Slowing in Municipal Defaults So Far this Year
Here's some good news for muni bond investors worry about the impact of Trump administration tax cuts: Municipal bond defaults have slowed dramatically, reports Matt Fabian's Municipal Market Analytics.
In the first six weeks of the year, only six issuers have filed first notices of impairment, he finds, compared to 25 in the first two months last year and 30 the year before.
Fabian writes Friday:
This is a distinct slowing of credit problems that reasonably follows: 1) somewhat stronger economic trends; and 2) materially stronger demand for high yield securities (which permits struggling project debt to be restructured prior to an actual impairment developing). These results are constructive generally for municipals and specifically for continued high yield performance.
The benchmark-tracking iShares National Muni Bond ETF (MUB) rose slightly Friday to $108.30. It is up 0.2% this year