While munis are holding up better than most asset classes amid the COVID-19 crisis, don’t be surprised to see a few defaults along the way, says Dan White, head of fiscal policy research at Moody’s Analytics.
“Aside from the immediate increase in demand for many government services during this national emergency, the most visible impact to most municipal issuers will come via lower revenues,” White said in a report released Friday. “If the downturn increases in magnitude or duration, expect the impact on the muni market to be much more severe.”
He said that when the COVID-19 crisis is finally over, municipal defaults and bankruptcies among at-risk issuers will likely rise.
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