Welcome to MutualFunds.com
Please help us personalize your experience and select the one that best describes you.
Your personalized experience is almost ready.
Check your email and confirm your subscription to complete your personalized experience.
Thank you for your submission
We hope you enjoy your experience
In addition, with the recent results from the Georgia’s senate run-off elections, the Democratic Party will now have control over all three branches of government – streamlining their efforts to get various legislations passed and, most importantly, undoing some of the things enacted by the previous administration.
In this article, we will take a closer look at the financial health of the municipal governments and the outlook for municipal debt in 2021.
Be sure to check out our Education section to learn more about municipal bonds.
Although there wasn’t a widespread municipal defaults in 2020, every local and state governments felt the extreme strain caused by a significant decrease in revenue sources that were linked to the economic activity: sales tax, fare revenues for transportation agencies, TOT tax related to tourism and many more. Furthermore, all the credit rating agencies in the municipal debt world have been extra busy during 2020 in their rating assessments and handing down credit rating downgrades throughout the year – which impacted a municipality’s ability to access the capital market at reasonable prices.
Source: Bloomberg Barclays Municipal AAA, AA and A indices
Click here to see a recap of how muni bonds fared in 2020.
With potential changes in the tax code and possible tax increases for high earners on the way, municipal debt instruments will become much more attractive for these investors and possibly put a downward pressure on the muni yields. It’s imperative to note that President-elect Biden ran his campaign on promising a change to the tax code so that high-earners are taxed at a higher marginal tax rate – which means, in 2021, we are likely to see an influx into municipal debt investments.
Source: Bloomberg Barclays Municipal Bond, Corporate Bond, and Treasury Bond Indices
Click here to learn more about the municipal debt due diligence process.
With the return of economic activity, we will see more and more issuers accessing the capital markets – which will present more investment opportunities.
Sign up for our free newsletter to get the latest news on municipal bonds delivered to your inbox.
Disclaimer: The opinions and statements expressed in this article are for informational purposes only and are not intended to provide investment advice or guidance in any way and do not represent a solicitation to buy, sell or hold any of the securities mentioned. Opinions and statements expressed reflect only the view or judgement of the author(s) at the time of publication and are subject to change without notice. Information has been derived from sources deemed to be reliable, the reliability of which is not guaranteed. Readers are encouraged to obtain official statements and other disclosure documents on their own and/or to consult with their own investment professionals and advisers prior to making any investment decisions.