A Flash in the Pan(demic)? Migration Risks and Municipal Bonds

Population changes become a more significant predictor of municipal bond yield spreads during the COVID-19 pandemic. Areas experiencing positive (negative) migration shocks in the middle of 2020 exhibit lower (higher) municipal bond yield spreads both immediately and through the end of 2021. This effect is larger for lower-rated and medium-term bonds, and is not explained by other local economic shocks. Further evidence highlights the importance of remote work in pandemic-era migration patterns. Our findings suggest that market participants believe that COVID-period migration captures a permanent, economically relevant, phenomenon that poses downside risk to the future of some municipal economies.

Keywords: Municipal Bonds, COVID-19, Migration, Remote Work, Work From Home

JEL Classification: G10, G12, J11, H70

Suggested Citation: Suggested Citation

Gustafson, Matthew and Haslag, Peter H. and Weagley, Daniel and Ye, Zihan, A Flash in the Pan(demic)? Migration Risks and Municipal Bonds (November 5, 2022). Georgia Tech Scheller College of Business Research Paper No. 4029984, Available at SSRN: https://ssrn.com/abstract=4029984 or http://dx.doi.org/10.2139/ssrn.4029984