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Triet Nguyen Discusses ESG and the Muni Dealer Community

BDA's Fixed Income Insights summer edition features Triet Nguyen's article on how the muni dealer community should approach Environmental, Social and Governance (ESG) concerns.

From ESG and the Muni Dealer Community:

To quote from rock musician Sting, “the numbers lead the dance.” Lately, the “numbers,” or rather, the data, have been overwhelmingly supportive of the municipal market, thanks to the very aggressive fiscal stimulus package pushed through by the new Administration.

Triet Nguyen's article on ESG and muni dealers appears in BDA's summer editionIn fact, save for a short period of unprecedented volatility between March and June of 2020, the tax-exempt asset class has displayed remarkable resiliency throughout the pandemic and may in fact come out of this health crisis in slightly better shape, with the exception of a couple of sectors (e.g., Higher Education and Senior Living). Even the State of Illinois got a minor upgrade out of it, despite having not solved a single one of its structural deficit issues!

Now that market dislocation and credit concerns have abated, as evidenced by historically tight credit spreads, one would expect the municipal market to finally follow in the footsteps of the rest of the financial markets and start focusing on the so-called “Environmental, Social and Governance” (“ESG”) issues. Is ESG mainly a “buy side” issue? Aside from giving the clients (the buyers) what they want, how should the dealer community approach ESG concerns?

More about this insightful BDA article

Nguyen discusses the confusion and lack of consensus around ESG. He offers insights into how muni dealers should think about ESG “risk” versus “impact” then offers a useful distinction between obligor-level and project-level assessments. Finally, he explains why it’s only a matter of time before the regulators come calling.

Read the rest of Triet’s article on ESG and The Muni Dealer Community.

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