Senior living and care communities are defaulting on municipal bonds more than ever before, Bloomberg reports.
Approximately $1.6 billion of municipal bonds issued for long-term care facilities have defaulted this year, representing 4.3% of the sector’s $37.6 billion of debt as of Jan. 1, according to Municipal Market Analytics, the media outlet reported. Moreover, more than 30 borrowers have missed a debt payment this year for the first time, tying the full year record set in 2020.
“COVID has made labor costs much higher, made staffing much more difficult and made occupancy more volatile,” Matt Fabian, a partner with Municipal Market Analytics, told Bloomberg.
“Longer term, it’s a sector with good prospects; medium term, we’re probably going to see more defaults,” he added.
It’s been difficult for borrowers to get ahead in the current economic climate. Providers have incurred increased costs for everything from wages and protective equipment to state restrictions on move-ins, Bloomberg reported. Workforce shortages in other sectors of healthcare don’t come close to the job losses the nursing home and assisted living industries have suffered during the COVID-19 pandemic, according to reports earlier this month by the American Health Care Association and National Center for Assisted Living.
“Across the country, access to long-term care is becoming strained as providers have no choice but to limit admissions or even close their doors,” AHCA/NCAL President and CEO Mark Parkinson said previously.