The COVID-19 pandemic has upended our lives and our financial markets. It is hard to assess the long-term effect of the virus, but it is clear the short-term and mid-term effects on the markets are and will be significant. This is especially true in the tax-exempt market. From traditional municipal bonds to conduit financing issued by municipal authorities, the impact will be vast.
As state and local governments continue to enact measures to control the spread of COVID-19, obligors of tax-exempt financing are likely to continue to see a significant drop in revenues. Because of this, revenue bonds may see a deterioration in credit quality. While some types of revenue bonds may be less adversely affected than other types of revenue bonds, the entire market could see significant stress as the pandemic continues.
(Read more: The Bond Buyer)
