The state and local government bond markets have held up well throughout the year despite a few high profile municipal defaults or bankruptcies by local governments. The forecasts from some commentators in 2010 and earlier this year predicting a municipal bond crisis have not come to fruition, and a collapse of the municipal debt markets is not likely to arise anytime soon. Certainly states and localities will continue to encounter fiscal strain, but potential defaults or bankruptcies are so few and far between that they are the “exceptions” that prove the “rule”. Earlier this year, NASBO and other state and local groups provided information indicating that significant concerns about the municipal markets were overblown. Recent trends indicate that the state and local groups’ analyses were correct, that municipal bonds were generally safe.

Municipal Bonds - An Update on State and Local Borrowing.pdf