Muni-Bond Market Is Already Seeing a First Wave of Distress (1)

Signs of distress are creeping into the muni market.

With local economies grinding to a virtual halt, businesses closed and more than 22 million Americans thrown out of work, the fallout is rippling through the $3.9 trillion market that finances far more than just governments that virtually never default on their debts. Hospitals, airports, stadiums and speculative ventures like the Virgin Trains USA railroad in Florida have also sold debt through government agencies -- and it’s backed by the money generated by their businesses.

Analysts widely expect to see more defaults in the state and local debt market, adding to ...