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Quarter-End Insights

Municipal Outlook: An Appetite for Risk Amid Low Supply

At a price, investors are still willing to take on municipal credit risk--even from some of the highest-profile and most fiscally distressed issuers.

  • Amid a low new-issuance supply environment, demand for new paper has been very high, even for some of the riskiest municipal issuers.
  • We continue to view Puerto Rico bonds as highly risky from a credit perspective and suitable only for investors who are willing to stomach the volatility that comes with such a credit.
  • Chicago continues to march toward its required spike in pension payments with little relief in sight; investors should carefully follow pension and budget developments.