In the near term, SNWAM has minimal municipal credit risk from falling crude oil prices.
Furthermore, we agree with the Federal Reserve that the U.S. economy as a whole will benefit from lower crude oil prices. The table below from the U.S. Bureau of Economic Analysis shows that oil and gas extraction and support activities are a limited contributor of total Real GDP – only 2.25% in 2013.
However, if crude oil prices remain at sub $60 per barrel of crude oil (bbl) for an extended period of time (all of 2015???), there may be clear winners and losers in the municipal credit space.
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