Hospital Bonds Recover as Costs Stabilize From Pandemic Levels

Hospital bonds are a surprising star performer in the $4 trillion municipal bond market this year, the same securities that took a beating when the Covid-19 pandemic caused costs to balloon.

Investment-grade hospital revenue bonds are up 2.62% year-to-date, ranking them third-highest of 11 sectors Bloomberg tracks in the category. The industry is being helped by easing labor costs and more-stable patient demand, making municipal bonds sold for hospitals a bargain, according to Brett Adelglass, an associate at Austin, Texas, investment firm Sage Advisory.

“When you look from a sector basis and a spread basis where things are ...