Municipal Bond Rates Up with $11.3 Billion in New Issues

The Municipal Bond market is heating up with $11.3 billion in new issuance planned for the week. This comes on the heals of a correction in the municipal bond market that saw rates rise from near record lows and inversely, bond prices fall.

Municipal Bonds are heating up with $11.3 billion in new issuance planned for the week. This comes on the heals of a correction in the municipal bond market that saw rates rise from near record lows and inversely, bond prices fall.

Among the issuers this week:

  • Minnesota plans to issue $906 million in general obligation bonds.
  • CHI, the second-largest Catholic health-care system in the U.S. is issuing  more than $1 billion of tax- exempt debt in three states.
  • Charolotte N.C. is offering $122 million in general obligation bonds.
  • Massachusetts Bay Transportation Authority is making available $218 million Build America Bonds.

The lack of demand on last week's offerings sent bond yields higher and bond prices lower. According to Bloomberg: "Municipal bonds due in five to 10 years have lost 2.4 percent this month, compared with a 2.2 percent decline in securities due in 15 years and longer, according to indexes compiled by Bank of America Corp.’s Merrill Lynch & Co."

From the same Bloomberg report:

“Keep a sharp eye out for sizable new-issue offerings that may be ‘priced to move’ in a difficult market,” John Dillon, a fixed-income credit strategist at Morgan Stanley Smith Barney in Purchase, New York, said in a report late last week. "

It will be interesting to see if Muni Bond yields rise as the economy gathers some steam and talk of future interest rate hikes increase.

Sam Cass
Sam Cass: Sam Cass, MBA, JD, University of Texas at Austin. Always a fan of Leonardo Da Vinci.

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