Muni bond distress higher; defaults mostly from corporate-oriented deals, health care

By Cristal Cody

Tupelo, Miss., Feb. 9 – Distress in the municipal bond market ticked higher in early February with the most defaults in 2024 expected from the corporate health care-related space.

“The broad municipal market is not expecting an increase in defaults when you’re talking about cities, towns, states,” an informed source told Prospect News. “Where the defaults are occurring are in the special financing type areas that are a little more corporate oriented.”

Defaults in the municipal bond space moved higher in early February with 11 defaults reported in the period from Jan. 30 through Feb. 2, up from nine defaults reported in the prior week, according to a note from Piper Sandler & Co.

One of the recent defaults included a multifamily housing bond from a senior resident facility – “part of the sector than has been under a bit more pressure,” a source said.

The Capital Trust Agency Florida Revenue Tuscan Gardens Senior Living Community registered a monetary default on Feb. 2 due to a missed interest payment on its series 2015 bonds.

The issuer’s 7% bonds due 2049 were last seen trading on Thursday with a 51 bid handle, up from 48 to 50 bid in January, a source said.

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