Three Key Atypical Credit Risks & Market Update

  • Political leaders seem to be succumbing to the advice of health professionals, despite the potential dire economic consequences. In the U.S., nearly 10 million have lost jobs in the last two weeks, more than during the 2008 World Financial Crisis. Forecasts are growing more dire by the day. The St. Louis Fed projects it is possible we see 52 million jobless and an unemployment rate of 32%;

  • The reality now is much different that the middle of March, when lawmakers began to put together the elements of the CARES Act, which was nowhere near close to being enough for municipals;

  • There are three key atypical risks to state and local governments and other municipal entities now: contagion risk, economic risk, and political risk.; and

  • We believe federal lawmakers need to return to Washington and deliver a significant phase four relief package that includes at least an additional $300-$600 billion of unencumbered aid for state and local governments and other municipal entities as soon as possible.

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