Strategies for Markets in Transition


The Great Infrastructure Build-Out

The Biden administration is pursuing a major increase in government infrastructure spending that could reshape the economy and the fixed income market for the next decade. Municipal bonds will be a critical resource to finance new infrastructure projects, which could create new opportunities for investors.


Municipal Bonds: Why now?

  • President Biden's 'Build Back Better' program could drive US job and economic growth over the next decade. 
  • Municipal financed projects have historically exhibited tremendous credit strength as demonstrated by low default rates.




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Biden’s ‘Build Back Better’ plan could drive the economy - and municipals

Developing the country’s infrastructure is a top priority for the Biden Administration, with the US government planning to invest on a historically ambitious scale. We believe this may also present a valuable opportunity for investors through municipal bonds. 

A sizeable investment 

The country needs to spend approximately $2-4 trillion by 2025 to improve its infrastructure, according to a 2017 global study by the American Society of Civil Engineers. The results clearly underscored the urgent need for significant investment to maintain and improve the backbone of our economy. President Biden’s ‘Build Back Better’ plan proposes an extensive list of new developments and improvements relating to transportation and general infrastructure, such as housing and education, as well as clean energy.  

Given the sheer size and scope of President Biden's current $2-4 trillion plan, we expect it could undoubtedly shape the economy for years, and have a major impact on the fixed income investment landscape1.  

Under President Biden's plan, bond issuance is likely to be concentrated in transportation, essential services and clean energy. We believe that focusing on sectors receiving fresh capital injections and long-term investment attention is compelling from a liquidity standpoint as well as from a fundamental, bottom-up analytical point of view.  

Paying for it all 

While there are numerous ways to finance roads, water and electric distribution networks public transportation, the municipal bonds have been the primary source of this funding for years. Historically, state and local government debt has paid for about two-thirds of public transportation.

The reality behind the building and maintenance of these public assets often makes it impractical to fund them solely through private sector capital. Because of this, municipal bonds are one of the most efficient ways for the government to achieve its infrastructure financing - another potential positive for investors.

Credit strength  

Municipal bonds have experienced historically low default rates. We believe this points to clear support for municipal bonds as a substitute for, or complement to, US Treasuries. Even high-yield, below-investment grade municipal securities have experienced tremendously low default rates, especially when compared to similarly rated corporate bonds.  

Growing issuance of taxable municipal bonds  

Given historically low global interest rates, non-US investors have shown increasing demand for US municipal bonds, which has spurred traditionally tax-exempt issuers to consider offering taxable bonds. Subsequently, taxable municipal bonds have become one of the fastest-growing fixed income asset classes2.  

We believe the outlook for infrastructure investment and its potential to help our economy transition to a stronger growth path, holds attractive opportunity for investors in the municipal bond market.  

1 Source:  as of January 2021.

2 Source: Bloomberg as of 12/31/20.


ESG & Infrastructure Could Drive Municipal Investing for the Next Decade

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Market Perspective

US Infrastructure Build-Out: What’s the Plan?

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Opportunities in Municipal Funds

Tax-Free Income from a Selectively Constructed Portfolio of High-Yield Municipal Bonds

Pioneer High Income Municipal Fund seeks to provide investors with attractive tax-exempt income, emphasizing nationally diverse sectors and downside risk management.

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A Tax-Exempt Municipal Bond Strategy for a Time of Transition

Pioneer AMT-Free Municipal Fund seeks to provide investors with a high level of current income,  exempt from federal income tax, by investing in investment grade bonds focused on sectors that provide essential services to America.

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