Thursday, March 10, 2011

Muni bonds

An interesting note, via Yahoo, from The Wall Street JournalVery low issuance (lowest since 2000) of new muni bonds this quarter.  Seems surprising in the face of the deficits. 

One thought is that there was a year-end rush to issue Build America Bonds before they expired.   So some of the bonds that might have been issued this quarter were advanced into late last year. My thought is that taxable investors may have lost their taste for tax-free muni bonds, or they are worried about default.  The Build America Bonds brought tax-free investors (endowments and pension funds) on the buying side, propping up demand.  With those potential buyers gone, there's less chance to move the product.

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