Muni-Bond Defaults Plunge in First Quarter, Defying Expectations

Signs of financial distress in the US municipal-bond market dropped in the first quarter to the lowest levels since before the pandemic, even as clouds grow over the economy, according to Moody’s Investors Service.

Municipal borrowers, excluding Puerto Rico, disclosed 38 defaults during the first quarter, falling almost 50% from the prior period, according to the rating company.

Just four borrowers missed a debt payment for the first time, down from 11 in the final quarter of 2022: two senior living facilities, a jail in Florida and a small Catholic university in Oakland, California. Separately, Municipal Market Analytics, ...