Public Pension Update

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Municipal bond investors finally have some good news regarding public pension plans after worrying about growing unfunded pension liabilities for many years. The Pew Charitable Trusts reports that aggregate state retirement systems are over 80% funded for the first time since 2008, following record investment returns for the fiscal year ending in 2021. In an […]

Municipal Credit Update: 2020 Financial Performance Better Than Expected

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At the onset of the COVID-19 pandemic in the United States, strict shutdowns and stay-at-home orders created concern for the economy and municipal finances. Forecasts for tax revenue were bleak with anticipated double-digit declines, and many state and local governments braced for a serious financial blow by adjusting budgets, cutting expenses, and delaying non-essential projects. […]

Municipal Credit Update: Revisiting the Pandemic’s Effect on Municipal Credit Risk

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“The potential impact of the COVID-19 pandemic on the City cannot be quantified at this time, but the continued outbreak of COVID-19 could have an adverse effect on the City’s operations and financial condition.” This disclosure, or something like it, is now regularly included in documentation by municipal issuers. While we would love to have […]

Municipal Credit Update: Managing Credit Risk amid the COVID-19 Pandemic

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Concerns of an economic downturn escalate as the rapid spread of COVID-19 necessitates widespread event cancellations, business and school closures, and quarantines. These actions have undoubtedly caused economic activity to decline, and we’ve already seen some consequences as equity returns have plummeted. Meanwhile, plunging oil prices are leading to lower prices at the pump while […]

Municipal Credit Update: Characteristics to Cautiously Consider

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Municipal bonds remain a key sector for bank portfolio managers. It’s not uncommon for banks with assets under a billion dollars to dedicate thirty percent or more of their portfolio to municipals. Clearly, pre-and post-purchase credit analysis of municipal holdings continues to be critical. Although municipal bonds generally experience very low default rates, certain types […]