(Corrects rankings of bond insurers in 3rd paragraph)
April 1 (Reuters) - Citigroup was the top underwriter of U.S. municipal bonds in the first quarter of 2014 as total supply shrank to $60.4 billion, down 25.7 percent from the same period in 2013, Thomson Reuters reported on Tuesday.
The investment bank underwrote 75 deals totaling $8.16 billion, according to the report. Bank of America Merrill Lynch ranked second with 68 deals totaling $6.17 billion.
Puerto Rico was the biggest issuer in the quarter with a $3.5 billion bond sale last month aimed at shoring up the commonwealth's shaky finances. California ranked second with $1.8 billion of bonds.
Insured bonds totaled $2.77 billion, up 28.4 percent from the first quarter of 2013. Assured Guaranty Municipal and its subsidiary Municipal Assurance Corp held onto the top spot among insurers with 117 deals totaling $1.43 billion. Build America Mutual ranked second with 135 deals totaling $1.33 billion.
Meanwhile, bonds backed by letters of credit plummeted to $402.8 million in the quarter, a 91.4 percent drop from the same period in 2013, Thomson Reuters reported. Royal Bank of Canada was the top provider, followed by the Bank of New York Mellon. (Reporting by Karen Pierog; Editing by David Gregorio)