Municipal market insight

Muni headwinds won't blow over quickly

May 6, 2020

We see challenges for munis ahead, and opportunities, too.

The municipal market regained a semblance of normalcy in April. Federal stimulus and bargain prices sparked a pickup in demand by mid-month, but the overall tone of the market remained cautious as the economic impact of the COVID-19 pandemic is yet to be measured. The S&P Municipal Bond Index finished the month down -1.18%, and -1.75% year to date.

We continue to view the muni market’s current weakness as a liquidity crunch rather than a solvency crisis. The dramatic decline in municipal revenues amid the economic shutdown is a temporary phenomenon and, in most cases, should not impact an issuer’s capacity to pay its long-term obligations. Investors who are discouraged by sweeping comments in the media will miss opportunities to secure high quality assets at very attractive prices. Learn more in our full report.

Peter Hayes
Head of Municipal Bonds
Peter Hayes, Managing Director, is Head of the Municipal Group within BlackRock's Global Fixed Income group and a member of the Global Fixed Income Executive Committee. ...
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Sean Carney
Head of Municipal Strategy, BlackRock Investment Strategy Team
Sean Carney, Managing Director and Head of Municipal Strategy and Primary Markets team within BlackRock's Global Fixed Income Group. He is also a member of the firm's ...
James Schwartz, CFA
Head Credit Research Analyst, Municipal Credit Research
Jim Schwartz, CFA, Managing Director, is Head of Municipal Credit Research within BlackRock's Global Fixed Income group. He is a member of BlackRock's Municipal Bond ...
To obtain more information on the funds, including the Morningstar time period ratings and standardized average annual total returns as of the most recent calendar quarter and current month-end, please visit:
Strategic Municipal Opportunities Fund
National Municipal Fund
High Yield Municipal Bond Fund
California Municipal Opportunities Fund
New York Municipal Opportunities Fund
New Jersey Municipal Fund
Pennsylvania Municipal Fund

The Morningstar RatingTM for funds, or "star rating," is calculated for managed products (including mutual funds, variable annuity and variable life subaccounts, exchange-traded funds, closed-end funds, and separate accounts) with at least a three-year history. Exchange-traded funds and open-ended mutual funds are considered a single population for comparative purposes. It is calculated based on a Morningstar Risk-Adjusted Return measure that accounts for variation in a managed product's monthly excess performance, placing more emphasis on downward variations and rewarding consistent performance. The top 10% of products in each product category receive 5 stars, the next 22.5% receive 4 stars, the next 35% receive 3 stars, the next 22.5% receive 2 stars, and the bottom 10% receive 1 star. The Overall Morningstar Rating for a managed product is derived from a weighted average of the performance figures associated with its three-, five-, and 10-year (if applicable) Morningstar Rating metrics. The weights are: 100% three-year rating for 36-59 months of total returns, 60% five-year rating/40% three-year rating for 60-119 months of total returns, and 50% 10-year rating/30% five-year rating/20% three-year rating for 120 or more months of total returns. While the 10-year overall star rating formula seems to give the most weight to the 10-year period, the most recent three-year period actually has the greatest impact because it is included in all three rating periods.

Performance data quoted represents past performance and is no guarantee of future results. Investment returns and principal values may fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost. All returns assume reinvestment of dividends and capital gains. Current performance may be lower or higher than that shown. Refer to blackrock.com for most recent month-end performance.