12/26/2023 0 Comments Herff jones llc data breach![]() ![]() Notably, these are lower rates than what occurs within the global corporate market, where such data figures are 5% and higher.ĭowngrades may become more numerous in recessions, although typically with a lagged effect. In any given year, roughly 1% of AAAs, AAs, and As each are downgraded a full rung according to Moody's data from 1970 to 2021. Let's consider how municipal bonds have historically performed through economic cycles.ĭowngrades occur in municipal bonds as they do in other fixed income credit sectors. And as active managers, we have already positioned our portfolios with our market expectations in view. We would like to proactively reassure you that the municipal bond market is broadly in strong shape, and remind you that there is a huge difference between a downgrade by a credit agency and a default that requires sacrifice by bondholders.Įven if there are pockets of credit stress, the benefits of diversified bond funds can greatly temper portfolio impact. Vanguard currently believes a recession will likely arrive this year, and municipal bond investors should expect that headlines about the potential for downgrades and defaults will soon follow.
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