PZA - How Municipal Bond Issuers Will Navigate The Crisis
By John Ceffalio
Tough times are ahead for municipal bond issuers. The recession—sparked by the coronavirus-led shutdown of the US economy—will temporarily reduce most tax and fee revenues pledged to bondholders. Continuing negative headlines will also drive issuer ratings downgrades over the coming months. From airports and public transit to education and healthcare, the spread of COVID-19 affects all municipal issuers.
Yet we expect municipal credit to be more resilient than other markets, and we don’t anticipate widespread municipal defaults. Here’s why.
Strong Issuer Fundamentals
Municipal bond issuers are fully equipped to deal with the