Black & Veatch Details Impact on Bond Market

Black & Veatch, a global engineering, consulting and construction company, on Jan. 14 released a report outlining the major impacts that financial liquidity and credit issues are having on the multi-trillion dollar market for U.S. municipal bonds.

Municipal bonds are the primary instrument for financing capital and infrastructure projects at all levels of municipal government.

“Recent large-scale developments in the municipal bond market occurred very rapidly,” said Richard Rudden, Black & Veatch senior vice president and executive sponsor of the report. “Although we are seeing some stabilization, liquidity remains extremely low and there is still significant uncertainty about the future of the bond markets. Many municipal and government-owned water, power, and natural gas utilities have found themselves in a critical situation without adequate funds to operate and build new infrastructure.

“With potentially hundreds of billions of dollars to be directed at infrastructure projects, it’s imperative that the bond markets return to health quickly."

The report’s author, Terry Agriss, an expert in public finance and a senior adviser to Black & Veatch, said, “Dislocations in the municipal bond market are beyond what anyone would have imagined 18 months ago. The traditional institutional buyers of municipal bonds have either greatly reduced their market activity or exited the market.”

Agriss added, “It is questionable whether individual investors can absorb all the debt governments need to sell, even at high interest rates. Regardless of the size of the proposed federal stimulus package for infrastructure projects, state and local governments are likely to need additional federal assistance to provide backstop loans if the municipal bond market continues to lack sufficient buyers.”

The Black & Veatch report examines changes in the municipal bond market and identifies possible directions the industry might take in the future. The report is available at

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