Stable credit, smart choices: Muni bonds adapt and remain strong

2025 municipal credit outlook

Nuveen has a favorable view of municipal credit in 2025. We support investors’ confidence in generating stable income from this public purpose asset class that finances essential infrastructure in the U.S. We base this strong conviction on five key credit dynamics that span across sectors.  

Five key municipal credit dynamics

• Municipal bonds finance essential infrastructure projects across the U.S. at the local level. These bonds are secured by taxes or dedicated revenue streams, and they are backed by a strong security pledge. 
• Reserve levels for state and local governments remain at all-time highs coming out of the pandemic, and leaders have budgeted conservatively for more normalized future revenues. 
• Republican control in Washington should not materially affect most municipal issuers, though some sectors such as health care, education and utilities may experience more impacts. 
• Have and have-not stratification persists in certain sectors such as higher education and health care, requiring discerning credit research to identify the best opportunities. 
• Real estate remains compelling when deals are structured effectively; spotlight on strong collateral coverage and shorter development timelines.