When strictly analyzing the default risk of your investment holdings, municipal debt is often regarded as one of the safest forms of investments – compared to corporate debt – because municipal bankruptcies are a rare occurrence in the United States.
This also means that municipal debt investors often spend more time analyzing other risk and intricacies of municipal debt like interest evaluating rate risk, comparing taxable and tax-free returns, and comparing revenue vs GO debt instruments. However, the number of recent municipal bankruptcies reminds investors to stay vigilant of the municipal default risk when making their fixed-income investment decisions.
In this article, we will take a closer look at the recent municipal bankruptcies, any commonalities, and what investors should look for before making their investment decisions.
municipalbonds.com
Jayden Sangha
Jan 22, 2020