- Muni distress is rare with annual default rate of 0.11%
- Defaults across the muni market hit levels not seen since 2021
Municipal bonds sold by colleges and charter schools became distressed at record levels in 2024, as the amount of defaulted state and local government debt hit a three-year high.
Last year was the “worst year for municipal defaults since 2021, breaking a three-year streak of sector-wide credit improvement,” wrote Matt Fabian and Lisa Washburn at Municipal Market Analytics in a report published Tuesday. Inclusive of the defaults, borrowers recorded 185 impairments, the most since the coronavirus pandemic roiled credit markets. Impairments can be a missed debt-service payment or an indicator of financial stress, like a broken covenant or the use of emergency means to pay investors.
Bloomberg Markets
By Erin Hudson
January 2, 2025