MacKay Municipal Managers Announces Top Five Municipal Market Insights For 2019: Tactical Moves Will Guide Investors through Market Uncertainty
PRINCETON, N.J., Jan. 9, 2019 /PRNewswire/ -- MacKay Municipal Managers™, the municipal bond team of fixed income and equity investment management firm MacKay Shields LLC, today published its top five insights for the municipal bond market in 2019.
Municipal financing with embedded real estate risk underperforms.
We anticipate the market will penalize sectors and credit structures exposed to real estate market values. Financings tied to selected commercial real estate, raw land housing development and continuing care retirement centers, in our opinion, will come under pressure as peaking market values recede. These same sectors also historically experience higher default rates (source: Municipal Market Analytics Inc.). By contrast, we believe that financings dependent on assessed valuations of existing developed real estate (e.g. general obligation debt) will find favor in the market as debt coverage remains strong.