Markets

"Munis are grappling with a storm of uncertainty," said James Pruskowski, chief investment officer at 16Rock Asset Management.

Moody's cited heavy reliance on reserves, potential for continued operating deficts, and a fall 2024 decline in enrollment as factors in the downgrade.

The central Texas city of Clyde said it issued tax and revenue anticipation notes with a 9.5% interest rate to repay its insurers after an Aug. 1 bond default.

It's hard enough convincing local governments to spend money on cyber insurance that covers ransomware attacks, said Omid Rahmani, public finance cybersecurity lead at Fitch Ratings. The new and very specific threat of a hacked financing process, is "absolutely" underappreciated by the public finance industry.

As the market prepares for 2025, there's a lot of uncertainty around what the new administration will mean for the macroeconomic environment and interest rates, the latter of which may be impacted by policy around the deficit, said Steve Shutz, portfolio manager and director of tax-exempt fixed income at Brown Advisory.

Despite the approval, hurdles remain, including the team's request for more money from the government, which they say delayed approval of the bonds, leading to additional construction costs.

The NFMA has floated best disclosure practices for public power agencies that ask for more data on climate and resiliency goals.

Analysts warn the many one-time measures in the budget Mayor Brandon Johnson narrowly got through City Council will make the 2026 budget even harder.

With investors now anticipating Wednesday's expected rate cut may be the last one for a while, "an overall bullish paradigm has been seriously weakened," noted Matt Fabian, a partner at Municipal Market Analytics, Inc.

Concerns are rising as the Congressional Budget Office has issued a report laying out the benefits of eliminating tax-exempt qualified private activity bonds.