![]() ![]() that default risk, not liquidity, is the main driver of municipal bond yields. Moreover, despite the expected rise in defaults, it appears that the outlook hasn’t dissuaded investors so far this year: “High-yield municipal bonds have returned 4.8% year-to-date, roughly two percentage points more than the broader market,” Bloomberg reported. Even though default rates on municipal bonds, even during the crisis. A high-yield corporate bond is a type of corporate bond that offers a higher rate of interest because of its higher risk of default. Still, credit pain will be focused on smaller issues, according to the article. That compares to an average default rate of 11.17 for rated corporate bonds over that same time period. With those buffers long gone, higher yielding debt outlook isn’t looking as bright. According to a report by Moody’s 7 which covers the default rates of municipal bonds from 1970 to 2011, the average default rate of rated municipal bonds was. ![]() The nursing home sector had until recently benefited from stimulus money and “extended stretch” of low interest rates, Bloomberg reported. The Challenge for Munis in 2022: Rising Rates Bloomberg AAA-rated municipal bond yield curves as of October 5, 2022, December 31, 2021, and DecemSource: Bloomberg Index Services Limited. Other real estate investment trusts (REITs) including National Health Investors (NYSE: NHI) didn’t see nursing home tenants among deferrals, with seniors housing needing several months of deferrals instead. Additionally, a large portion of these losses would eventually be recovered by insurers after the bonds default, as historical recovery rates for municipal. Pam Kessler, LTC CFO, believes occupancy recovery and reduced deferrals will happen this year. More recently, nonprofit giant Evangelical Lutheran Good Samaritan Society consolidated its operations from 22 states to seven in January.īloomberg noted that hospital covenant problems are quickly becoming a hallmark of the late pandemic period, an interesting parallel to what Skilled Nursing News has been hearing in terms of rent deferrals among operators.ĭuring the third quarter earnings call for LTC Properties (NYSE: LTC), the company shared that labor shortages prompted continued requests for incremental rent deferrals and abatements among its SNF operator tenants. ![]()
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