BlackRock Warns of More State Debt Downgrades as Rainy Day Funds Fall for First Time Since 2008
Updated
Updated · Bloomberg · May 13
BlackRock Warns of More State Debt Downgrades as Rainy Day Funds Fall for First Time Since 2008
1 articles · Updated · Bloomberg · May 13
BlackRock said the municipal bond market is turning “less forgiving,” with increased downgrades looming for state and local government borrowers in its second-quarter outlook released Wednesday.
State finances are weakening as revenues soften and rainy day fund capacity declines for the first time since the Great Recession, according to municipal bond group head Pat Haskell.
That pressure is being driven by the end of pandemic-era stimulus, slower tax collections and rising costs, leaving issuers with less cushion against budget stress.
The warning points to tougher conditions ahead in the $4 trillion-plus municipal bond market as investors scrutinize weaker state and local credits more closely.
As municipal credit risks rise, which cities offer hidden financial stability and opportunities for investors?
With state rainy day funds at a post-recession low, are cuts to essential public services now inevitable?