Credit and Market Update

  • Moody’s lowered its outlook on the U.S. local government sector to “Negative” from “Stable” on Monday mostly because of COVID-19 related factors; lowered state outlook last week.

  • The American Hospital Association estimates a four month impact totaling $202 billion of financial losses for March 1, 2020 to June 30, 2020 for America’s hospitals and health systems.

  • SEC Chairman Jay Clayton and Director of its Office of Municipal Securities Rebecca Olsen released a public statement on May 4: Importance of Disclosure for our Municipal Markets.

  • The National Federation of Municipal Analysts sent a letter to the MSRB asking for the development of a better process and structure for issuers to arrange COVID-19 disclosure.

  • At the beginning of this week, the Coronavirus Relief Fund Frequently Asked Questions Updated as of May 4, 2020 was posted on the Treasury’s website. It is related to the CARES Act Coronavirus Relief Fund.

  • Commentary from Wharton School’s Robert Inman and Penn Law’s David Skeel: Here’s a fair approach to calculating COVID-19 specific aid to the states.

  • S&P Global Ratings updated the market on how they see pensions evolving in the near- to medium-term. S&P noted, “If returns stagnate, we [S&P] estimate the funded ratio for the average state and local government pension plan could decrease to 60% from 73%.”

  • California Governor Gavin Newsom’s office announced yesterday that they expect a $53 billion state budget shortfall and that California unemployment could hit 18%.

  • The Fifth U.S. Circuit Court of Appeals upheld changes the pension board made to the Dallas Police and Fire Pension Fund. This court decision is a constructive development for the City of Dallas’ credit profile.

  • Illinois $1.2 billion short-term issue was pulled this week, now considered day-to-day.

  • Lipper reported money flowed out of municipal funds again this week (ending May 6) of $408 million.

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