Municipal Bonds for Private Projects Labeled as Green Stand Out as Risky
- Green bonds made up 45% of industrial development defaults
- The designation may signify ‘some kind of credit infirmity’
Industrial development bonds, which are sold by local and state governments to finance private projects like energy and recycling plants, carry more risk than other types of muni bonds.
Photographer: Emily Berl/Bloomberg
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Municipal bond investors seeking higher returns from social or environmental do-good projects should be very wary.
That’s according to Municipal Market Analytics. Industrial development bonds, which are sold by local and state governments to finance private projects like energy and recycling plants, carry more risk than other types of muni bonds. Moreover, those labeled green accounted for 45% of first-time payment defaults by IDB borrowers since 2021, a MMA analysis said.