The economic fallout from COVID-19 is expected to reverberate throughout the US economy. Municipal bonds are no exception. Loomis, Sayles & Company’s Municipal Credit Research Team provides outlooks across the municipal bond market.

Tax-Backed Sectors

  • States: We believe the impact of COVID-19 on state finances will be negative in the near term, while the longer-term effects will depend on the severity and duration of the pandemic.
  • Counties and Cities: We’re maintaining a stable outlook on counties and cities. Our outlook reflects the fact that property taxes, the sector’s primary revenue source, are less economically cyclical than other municipal revenue sources.
  • School Districts: Our stable outlook for school districts generally reflects the sector’s reliance on property tax revenue. Beyond local property taxes, school districts largely rely on state funding.
Revenue-Backed Sectors

  • Airports: We expect COVID-19 to have a high impact on the airport sector.
  • Convention Centers: The spread of COVID-19 has introduced some economic and credit uncertainty, especially for issuers largely reliant on tourism and consumer discretionary spending.
  • Higher Education: We are maintaining a negative outlook for the higher education sector, though this is a very fluid situation with many unknowns.
  • Hospitals: We have a negative near-term outlook on not-for-profit hospitals and health systems, reflecting uncertainties about capacity, increased supply costs and an expected spike in labor and benefit costs.
  • Ports: With the sharp drop in shipping activity and the strong possibility of a further slowdown, we have a negative short-term outlook for the port sector.


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