Insights Now What's behind muni moves?
Jun 27, 2025
Neene Jenkins, Head of Municipal Credit Research, sheds light on the evolving landscape of municipal bonds. She discusses their enticing tax-equivalent yields and how they stack up against Treasuries and corporate credit. Jenkins dives into the dynamics of the steepening yield curve, revealing opportunities despite challenges from federal policies. With consistently lower default rates compared to corporate bonds, the case for munis grows stronger, especially in times of economic uncertainty. She also emphasizes the need for strategic investments in infrastructure.
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Unique Features of Municipal Bonds
- Municipal bonds offer tax advantages exempting federal and often state and local taxes.
- They involve a broad credit base with over 50,000 issuers, many outside major indexes, offering diverse investment opportunities.
Types of Municipal Issuers
- Municipal issuers fall into tax-backed and revenue-backed groups including essential monopolistic and discretionary enterprise sectors.
- Examples include states and school districts, electric and water utilities, hospitals, and higher education institutions.
Strong Fundamentals for Major Munis
- Major municipal debt issuers enter 2025 with strong revenue performance and reserves.
- Conservative management helps stabilize the market despite some moderation in revenues recently.