No Big Muni Default Wave Coming
In 2010, Meredith Whitney, famed market analyst, made a bold call that still haunts her and the muni market to this day-that there would 50 to 100 sizable defaults in the next year. The call, which came on 60 Minutes in 2010, led to a major backlash by the muni market. Besides Detroit and Puerto Rico, which were widely forecasted, her predictions never came true, or at least were certainly far too early. To this day, many of the problems that haunt the muni market, like shrinking populations in indebted areas, are still definitively long-term issues that are not going to immediately take down the market. Even the pension deficit is not as bad as many perceive, with a 71% funded ratio on average (economists say the optimal number is 80%).
FINSUM : The muni market gets a lot of bad press, mostly because of the handful of dire situations, but on the whole it has been quite steady.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.