2023 Municipal Credit Outlook


Abby Urtz, and Ryan Henry

In our January Monthly, we provide some thoughts on 2024 credit considerations across investment-grade municipal sectors. The takeaway is that while investors should be bracing for weaker credit metrics this year, any softening in credit quality is more likely to represent a normalization back to pre-pandemic levels than a sign of real credit concerns. There are a few exceptions in sectors facing structural changes coming out of pandemic, but for the most part, we’re neutral on credit and see opportunities to selectively add credit exposure in the new year. Also in this month’s publication, we address prepayment concerns in the municipal housing sector and show investors how to assess this risk as we enter a period of lower mortgage rates. If you’re interested in this sector, this is a must read as we share valuable data on prepayments by state in prior easing cycles to shine light on what can be expected this time around.

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