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Friday, June 21, 2024
 

MANAGING DIRECTOR:
Scott Carrithers
 
PORTFOLIO SALES AND SERVICE:
Chris Thompson • Sean Doherty • Kevin Doyle • Mark Tranckino
Natalie Regan • Aaron Stoffer • David Farris • Lonnie Harris • Brian Schaff • Jeff Macy
Josh Kiefer • Tom Toburen •  Todd Czinege

US Treasury Market
Date 1 mo 3 mo 6 mo 1 yr 2 yr 3 yr 5 yr 7 yr 10 yr 20 yr 30 yr
06/14/24 5.33 5.39 5.34 5.07 4.71 4.44 4.24 4.22 4.22 4.47 4.35
06/17/24  5.34 5.39 5.36 5.11 4.77 4.51 4.30 4.28 4.28 4.52 4.41
06/18/24 5.29 5.38 5.35 5.09 4.72 4.44 4.24 4.22 4.22 4.47 4.36
06/19/24 5.29 5.38 5.35 5.09 4.72 4.44 4.24 4.22 4.22 4.47 4.36
06/20/24 5.26 5.37 5.36 5.11 4.74 4.47 4.27 4.26 4.26 4.50 4.40

   The data in the table above is static as of the time it was pulled, so rates may have changed. Treat all data in this table and PMR as indications only and availability is
   always subject to change.   This information was pulled manually from sources we believe to be reliable. New source, as of 12/12/2022, Bloomberg, L.L.P.  As of:  close
   of business 06/20/2024.
                                                                                                                                                                                        

Safety in Munis
 

Periodically, it is worthwhile to be reminded of the safety of the municipal bond sector as a whole.  Moody’s Investors Service issues a report every few years highlighting their findings surrounding defaults and rating trends of all municipal bonds that they rate.  Their most recent study, covering the time frame of 1970-2022 provides some valuable insights:
  •          The median rating of municipal issuers is Aa3, compared to Baa3 for global corporate issuers.
  •           There was only one new default in 2022 of a municipal issue rated by Moody’s.  This was a Texas A&M student housing project which was rated Caa2 negative.
  •           A study extending to all municipal issuers, both rated and unrated by Moody’s, reveals that the highest default risk lies in the senior living sector and local government special districts.
  •          Defaults for the general government and municipal utilities categories have been exceedingly rare, with a five-year aggregate cumulative default rate of just 0.03% since 1970.
  •      Overall, the credit quality of the municipal sector had stabilized a decade after the Great Recession, further aided by accelerated economic recovery and growth across many parts of the US over the two years leading into 2020.  In 2022, there were more rating upgrades than rating downgrades.  Rating drift has generally been flat or positive since late 2015.
In summary, we hope this helps you sleep a little better knowing that risk of default in the municipal market remains quite remote.  We continue to stress our tried-and-true recommendation of sticking with general obligation credits and essential purpose revenue bonds, particularly those in regions with which you have some familiarity.   Staying abreast of ratings changes and material events for your municipal holdings should provide you fair warning of a possible credit decline.  Please let us know if you would like assistance in monitoring your municipal portfolio, or if you have questions about any of your specific holdings.     


Source: “US Municipal Bond Defaults and Recoveries, 1970-2022”, Moody’s Investors Service, July 19, 2023 / Past performance is no indication of future results.



This information is intended for institutional investors only. The material provided in this document/presentation is for informational purposes only and is intended solely for private use. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instruments.

•Not FDIC Insured •No Bank Guarantee •May Lose Value