Fitch Ratings just released its survey of big investors’ views of the future of various debt markets “going forward.”
Of the insurance companies, pension and hedge funds, and other asset managers that responded, 12 percent said that the tax-exempt muni bond market would “deteriorate significantly,” while another 51 percent said that it would “deteriorate somewhat.” Only 17 percent saw significant or even some improvement in the cards, while 20 percent expected no change.
If these investors are correct (which is not assured!), this news is bad for cities, towns, and states.
Municipal issuers would face higher borrowing costs, perhaps much higher — another reason for them to use their federal stimulus funds on wise capital projects.