UBS Sees Muni-Bond Market Facing Biggest Storm in Modern History

States still seen as a haven, despite vast budget gaps
But once-booming high-yield niche may see ‘surge of defaults’

Caution tape block off a lakefront bike path in Chicago, Illinois, U.S., on Friday, April 3, 2020. The world's workers are reeling from the initial shock of the coronavirus recession, with job losses and welfare claims around the globe already running into the millions this week.Photographer: Christopher Dilts/Bloomberg

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By Amanda Albright and Danielle Moran

May 14, 2020 at 1:30 PM UTC

This article is for subscribers only.

To the analysts at UBS Global Wealth Management, the $3.9 trillion municipal-bond market is heading into the biggest financial storm anyone has ever seen.

The nation’s swift economic collapse is hitting virtually every corner of the market, which extends far beyond states and cities with the power to raise taxes.