UPDATE 1-Muni bond volume off 1.5 pct, Citi top underwriter
(Adds details, reaction, background)
CHICAGO, Oct 1 (Reuters) - Municipal bond volume fell 1.5 percent to $316 billion so far in 2008 compared to the same period in 2007, while Citigroup (C.N) retained its title as top senior underwriter, Thomson Reuters reported on Wednesday.
Muni bond sales have nearly ground to a halt in recent weeks as the credit crunch pushed yields across the curve to as much as six-year highs, forcing issuers to postpone deals.
Still, year-to date volume reflected the second-highest three quarters total behind the $321 billion sold during the same period in 2007, Thomson Reuters said.
"New issue volume was at a record pace through the first eight months," said Matt Fabian, managing director at Municipal Market Advisors in Westport, Connecticut, adding:
"The drop now is completely a function of the current credit crisis. The primary market has been effectively tabled for two and a half weeks as institutions have little interest in buying muni bonds and issuers are loath to accept the high interest rates a new sale would require."
Citigroup continued its reign this year as top underwriter with $49.3 billion in sales during the first nine months. Merrill Lynch & Co MER.N, which plans to be sold to Bank of America (BAC.N), came in second, underwriting $31.3 billion.
California was the top issuer with $8.1 billion of debt sold, with New York City in second place with $5.3 billion.
The amount of insured munis issued plummeted 58 percent to just under $65 billion in the first nine months of 2008, compared to $157 billion during the same period in 2007, according to Thomson Reuters data.
Financial Security Assurance (DEXI.BR), one of the few muni bond insurers to retain an "AAA" rating, was the top guarantor, followed by Assured Guaranty (AGO.N). Berkshire Hathaway Assurance (BRKa.N), a new top-rated insurer, ranked third, but with just $1.8 billion of debt covered by its insurance. (Reporting by Karen Pierog; Additional reporting by Lisa Lambert in Washington; Editing by James Dalgleish)
