It is News, Not Just Noise
Municipal bond market observers and participants may be underreacting to recent, important credit-related municipal bond market news. This commentary summarizes several examples of this news and notes why they are important. Examples include Kentucky’s pension crisis, Alaska’s cuts to higher-ed funding, John Tillman’s lawsuit against Illinois, Chicago’s request for pension assistance, an institutional investor’s questioning of the GO pledge, the Fed’s shift in how it measures pension liabilities, and New Jersey’s manipulation of its discount rate to aid its budget. These events reinforce questions of issuer willingness and ability to pay. It is likely that similar pressures will result in additional incidents in the near future that should not be ignored.