Light Issuance of New Municipal Bonds is currently gripping the municipal bond market. California’s treasurer has warned that there is the possibility that no new general obligation municipal bonds would be issued this year. Current issuance is less than 50% of the same period last year.
There are several problems with a market like this:
- Pricing when selling or buying municipal bonds may be even more difficult. More brokers may need to be contacted than previously.
- Mutual fund outflows has been going on for 18 weeks straight.
- If more Muni bonds are issued soon, they may have to pay higher yields to tempt cautious investors.
One advantage is that optimistic buyers may be able to squeeze out some better deals from those desperate to sell. A solid Relationship with a strong bond broker is a must to achieve this.