Summary
– Municipal bond markets face systemic risks from governance failures and fiscal mismanagement, highlighted by Puerto Rico’s PREPA and higher education defaults.
– Distressed credits like TSFC bonds (Cusip 88880NAU3) show declining revenues and structural weaknesses, trading at steep discounts despite no full default.
– Rising municipal yields (30-year bonds >5.5%) reflect increased default risks, while policy shifts and volatility demand active hedging via CDS, futures, and duration management.
– Investors must prioritize credit discipline, sector diversification, and liquidity analysis to balance income potential with capital preservation in a destabilized market.
ainvest.com
by Theodore Quinn
Wednesday, Aug 27, 2025 2:17 pm ET