Roughly 7 percent of the $43 billion in outstanding senior-living bonds, or about $3.2 billion, is in default on a payment, according to data compiled by Bloomberg. That compares to a rate of less than 1 percent for all state and local government debt.
For elderly people with more options, the pandemic accelerated a growing preference to avoid senior living, said Eric Kazatsky, senior US municipals strategist at Bloomberg Intelligence.Kazatsky points out that a significant number of Americans in the 55 to 65 age group now have long-term care insurance, giving them “a sense of agency over how their care is given.” And more seniors are moving in with their children in a return to multi-generational households, he added.
But a decline in new defaults “may not mean the sector is stabilizing,” Municipal Market Analytics analysts Matt Fabian and Lisa Washburn wrote in a May 8 report, citing continued high inflation, interest rates and labor costs. Senior living encompasses a variety of options, from communities where residents are healthy and live independently, to those that provide full-time care. Many developments include a range of care so residents may start out in an independent unit and eventually move to sections offering more support.