WASHINGTON Aug 1 Issuance of U.S. municipal
bonds fell steeply in July, with sales for the first seven
months of 2014 running 15.4 percent below the same period last
year, according to Thomson Reuters data released on Friday.
Total sales in July were $25.6 billion, 23.8 percent below
June and 10 percent below the $28.4 billion sold in July 2013.
June's issuance is proving an anomaly instead of an
indicator that the summer reinvestment season, when bondholders
typically spend their coupon and principal payments on more
municipal debt, could lift the market. Sales leapt to $33.61
billion in June - the highest monthly total since April 2013.
But in July sales of both new and refunding bonds tumbled
from that peak. Refinancing fell to $13.04 billion from $19.38
billion in June and new debt to $12.56 billion from $14.23
billion in June.
Altogether, there were 786 bond deals in the month, the
lowest since March. Most of the deals - 428 - were for new debt,
indicating that new borrowing was carried out in smaller sales.
For most of 2014, desiccated issuance has given buyers few
places to put their money.
Rising municipal bond interest rates in 2013 made refunding
no longer affordable and ended a long string of refinancing
issuance. While refunding in July was 29 percent below sales in
July 2013, new debt ran 21.4 percent more than in July 2013.
Some see a brighter tomorrow for municipal bonds.
"Munis have come a long way, and the market has righted
itself to more traditional levels. But we still think they offer
value and if you are in a high tax bracket the tax exemption is
still a great benefit," said Jim Murphy, manager of the T. Rowe
Price Tax Free High Yield and the new Intermediate Tax Free High
Yield Funds, in a statement.
(Reporting by Lisa Lambert; Editing by Tom Brown)