[July 13, 2026]

MacKay Municipal Managers™ Provides Mid-Year Scorecard Update to Top Five Municipal Market Insights for 2026

MacKay Municipal Managers™, the municipal bond team of specialty fixed income manager MacKay Shields, today released its 2026 Municipal Bond Market Insights Mid-Year Update, noting that the firm's five key municipal market themes identified at the beginning of the year remain largely intact despite evolving market conditions.

At the midpoint of 2026, MacKay Municipal Managers™ believes the municipal market will continue to offer investors a compelling case for allocation. Absolute yield levels provide a meaningful tax-exempt income opportunity, while credit fundamentals remain broadly supportive, and valuations remain reasonable.

"The opportunity in municipal bonds remains compelling, but selectivity is becoming increasingly important," said David Dowden, Managing Director and Portfolio Manager at MacKay Municipal Managers™. "As the market grows more differentiated across issuers, sectors and maturities, investors who emphasize active credit research, thoughtful curve positioning and disciplined risk management may be better positioned to identify relative value and navigate opportunities through the remainder of the year."

MacKay Municipal Managers™ - Top Five Municipal Market Insights for 2026: Mid-Year Update

1. Essential service munis lead in 2026, proving revenue resilience: On Target
Investment grade essential-service revenue-backed municipal bonds continue to appear well positioned to outperform their tax-backed equivalents in 2026. Also, dedicated revenue streams and resilient demand characteristics may provide stronger credit visibility amid growing fiscal pressures on many state and local governments.

2. Investment grade curve positioning drives returns in 2026: On Target
The 12-22 year portion of the Investment Grade municipal yield curve remains one of the most important return drivers for 2026 after the municipal yield curve normalized from significant steepening in 2025. The firm believes the best relative value in Investment Grade municipals resides in this area and that new issuance patterns should concentrate in shorter and intermediate maturities as issuers seek to capitalize on rich valuations created by SMA and ETF demand.

3. Dispersion of high yield muni fund returns puts onus on credit selection vs income: Pending
Already evident in 2025, dispersion across high yield fund returns is poised to widen further in 2026. Idiosyncratic credit risks are increasingly driving outcomes and putting price appreciation at risk, especially as several high-profile credit events approach key inflection points. The firm notes that tight compensation reinforces the importance of avoiding highly leveraged issuers and credits where incremental yield does not adequately compensate for downside risk.

4. Intermediate taxable municipals elevate multi-asset portfolios: On Target
Taxable municipals continue to serve as a diversified source of high-grade income within multi-asset portfolios and the firm expects these benefits to prove particularly prominent when compared with U.S. corporate bonds in 2026, as an oncoming wave of corporate supply could lead to deteriorating technicals as well as negative ratings migration in that asset class. With corporate valuations tight and growth concerns still present, the firm also believes taxable municipals continue to offer attractive relative value versus other high-quality fixed income sectors.

5. Complement passive SMA exposure by adding more flexible products: On Target
The firm continues to see investors complement traditional SMA exposure with more flexible municipal strategies that can access broader market segments and respond actively to relative-value opportunities. Structural constraints within passive separately managed accounts (SMAs) may position active managers to seek alpha through overlooked market segments such as AMT bonds, electric and natural gas preays, and housing securities.

About New York Life Investment Management
With approximately $807 billion* in assets under management as of March 31, 2026, New York Life Investment Management is a Pensions & Investments' Top 30 Largest Money Manager** and one of the largest active asset managers globally, with leading positions across both public and private markets. Comprised of the affiliated global asset management businesses of New York Life Insurance Company, New York Life Investment Management is committed to achieving enduring financial outcomes and building long-term partnerships across market cycles and generations. Our specialized, independent investment teams bring disciplined active management and deep expertise to help clients navigate the next era of investing.

"New York Life Investment Management" is the brand name and service mark used to represent a group of affiliated investment advisers of New York Life Insurance Company: Andera Partners, Apogem Capital LLC, Ausbil Investment Management Limited, Bow River Asset Management, LLC, Candriam S.C.A., Kartesia Management S.à r.l., MacKay Shields LLC, New York Life Investment Management LLC, NYL Investors LLC, and Tristan Capital Partners LLP.

*Assets under management (AUM) includes assets of the investment advisers that make up "New York Life Investment Management" as of 3/31/2026. AUM includes certain assets, such as nondiscretionary AUM, external fund selection, and overlay services, including ESG screening services, advisory consulting services, white labeling services, and model portfolio delivery services, that are not necessarily considered Regulatory Assets Under Management according to the SEC's Form ADV. AUM is reported in USD. AUM not denominated in USD is converted at the spot rate as of 3/31/2026.

The total AUM figure for "New York Life Investment Management," as a brand, is less than the sum of the AUM of each affiliated investment adviser in the group because it does not count AUM where the same assets can be counted by more than one affiliated investment adviser. In addition, AUM includes assets of certain, but not all, investment advisers affiliated with New York Life Insurance Company and excludes assets managed by Andera Partners and Bow River Asset Management, LLC. AUM is based on estimates and is subject to change.

**New York Life Investment Management ranked 28th largest institutional investment manager in Pensions & Investments' Largest Money Managers 2025 published June 2025, based on worldwide institutional AUM as of Dec. 31, 2024. No direct or indirect compensation was paid for the creation and distribution of this ranking.

About MacKay Municipal Managers™
MacKay Municipal Managers™ is a recognized leader in active municipal bond investing and is entrusted with $84 billion in assets under management, as of March 31, 2026. The team manages a suite of highly rated municipal bond solutions available in multiple investment products and vehicles. MacKay Municipal Managers™ is a fundamental relative-value bond manager that combines a top-down approach with bottom-up, credit research. Our investment philosophy is centered on the belief that strong long-term performance can be achieved with a relative value, research driven approach in a highly fragmented, inefficient municipal bond market.

All investments involve market risk, including loss of principal. Bonds are subject to interest-rate risk, credit risk, and potential loss of value if rates rise. Municipal bonds carry risks such as issuer repayment ability, limited information, and possible tax or legislative changes. Lower-rated securities may have higher risks of nonpayment. This material reflects the opinions of MacKay Municipal Managers™, not necessarily MacKay Shields LLC.

Availability of this document and products and services provided by MacKay Shields LLC may be limited by applicable laws and regulations in certain jurisdictions and this document is provided only for persons to whom this document and the products and services of MacKay Shields LLC may otherwise lawfully be issued or made available. None of the products and services provided by MacKay Shields LLC are offered to any person in any jurisdiction where such offering would be contrary to local law or regulation. It does not constitute investment advice and should not be construed as an offer to buy securities. The contents of this document have not been reviewed by any regulatory authority in any jurisdiction. The opinions expressed herein are subject to change without notice. This material is distributed for informational purposes only. Forecasts, estimates, and opinions contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. Information contained herein has been obtained from sources believed to be reliable, but not guaranteed. Any forward-looking statements speak only as of the date they are made and MacKay Shields assumes no duty and does not undertake to update forward-looking statements. No part of this document may be reproduced in any form, or referred to in any other publication, without express written permission of MacKay Shields LLC. ©2026, MacKay Shields LLC. All Rights Reserved.

Past performance is not indicative of future results, and there is no assurance that investment objectives will be met.

About MacKay Shields LLC
MacKay Shields LLC ("MacKay Shields")*, a New York Life Investment Management company, is a global asset management firm with $158 billion in assets under management** as of March 31, 2026. MacKay Shields manages fixed income strategies for high-net worth individuals and institutional clients through separately managed accounts and collective investment vehicles including private funds, collective investment trusts, UCITS, ETFs, closed end funds and mutual funds. MacKay Shields provides investors with specialty fixed income expertise across global fixed income markets including municipal, high yield, investment grade, structured credit, convertible and emerging markets debt. The MacKay Shields client experience provides investors direct access to senior investment professionals. For more information, please visit www.nylim.com/mackay-shields or follow us on Twitter or LinkedIn.

*MacKay Shields is a wholly owned subsidiary of New York Life Investment Management Holdings LLC, which is wholly owned by New York Life Insurance Company. "New York Life Investment Management" is both a service mark, and the common trade name of certain investment advisers affiliated with New York Life Insurance Company.

**Assets under management (AUM) as of March 31, 2026 represents assets managed by MacKay Shields but excludes certain accounts and other assets over which MacKay Shields continues to exercise discretionary authority to liquidate but which are no longer actively managed.

For more insights from MacKay Municipal Managers™ and our New York Life Investment Management affiliates click here.

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