Building Infrastructure
Protecting Investors

Understanding key credit factors that influence MUD investments

May is Asian American and Native Hawaiian/Pacific Islander Heritage Month, and Build America Mutual, and our associates are taking the opportunity to celebrate the achievements of our Asian American, Native Hawaiian, and Pacific Islander colleagues, counterparties, and members.

Understanding the risks to municipal credit quality posed by public sector commitments to retirees requires a dynamic analysis that includes considering the effect of prevailing and anticipated interest rate and inflation environments on pension funding. That analysis is particularly important now: Fueled by recent economic stimulus measures and supply chain issues, inflation is picking up. Amidst uncertainty over whether the uptick in inflation is transitory or part of a longer-term trend, this paper examines the credit implications related to U.S. state and local government pensions of different scenarios for interest rates and inflation.