WASHINGTON May 3 Trading of U.S. municipal
bonds in the first quarter declined from the same period the
year before, according to data released on Thursday.
By par amount, $791.7 billion of muni bonds were traded, 6
percent lower than the amount traded a year ago, the Municipal
Securities Rulemaking Board reported. However, the amount of
bonds traded in the first three months of this year jumped 3.4
percent over trading in 2011's fourth quarter.
When measured by the number of trades, first quarter
activity took a steeper drop of 18 percent to 2.42 million
trades compared to the same period in 2011.
The $3.7 trillion municipal market was rocked in December
2010 by analyst Meredith Whitney's pronouncement that municipal
bond defaults would surge. Spooked by predictions that have yet
to come true, individual investors fled the market in the first
quarter of 2011.
Meanwhile, issuance of new debt plummeted to a 10-year low
in 2011. Cities, states and other government authorities sped up
financing plans to take advantage of the popular Build America
Bonds program before it expired on Dec. 31, 2010, and created a
debt drought in the quarter that followed.
This year, new sales have ticked up, as issuers refund their
outstanding bonds and take advantage of low interest rates.
Bonds sold by Puerto Rico and Illinois, which are among the
ones with the widest credit yield spread over triple A bonds,
ranked in the top four for number of trades in the first
Customer buying by average daily par amount dropped to $6.4
billion in the first quarter from $6.7 billion in the same
period last year, the MSRB said.
When looking at customer purchases of $100,000 or less of
bonds, which are preferred by individual investors, the daily
average was $451.3 million, down from $570.5 million in the
first quarter of 2011. The daily average of the number of these
smaller purchases also dropped, to 14,510 from 19,513 the year
The board, a self-regulatory organization, writes the rules
for the market that the Securities and Exchange Commission
enforces. But over the last few years the MSRB has also become a
centralized repository for information on the market, compiling
trading statistics while also posting disclosure documents.