Municipal Bond Forum
Why are there fewer new issues?
Q
I recently noticed that the tax-free inventory being offered for sale by FMSbonds seems to have shrunk. I also noticed that most bonds are out to longer maturity dates for any decent returns. Many of them also seem to be carrying a heavy premium for a decently priced issue. If we intend to sell some decent holdings, it would seem that it should also work in the opposite manner. To what do you attribute the apparent shortage of tax-free new issues?
A
James A. Klotz responds:
Your observation is correct.
Recently, a confluence of events has limited the supply of tax-free bonds in the marketplace. Due to austerity measures adopted by various states and municipalities, there has been less issuance of debt. This, in combination with increased demand for municipal securities from individual and institutional investors, has produced this scarcity of available bonds.
Yes, the inventory on our Web site is sparser than usual because we only display issues we feel represent excellent value to our clients.
As you know, our Web site differs from others in that we own the bonds we offer. If we won’t own them, we won’t recommend them to you.
By the way, as you can tell from your most recent account statement, municipal bond prices are higher across the board. These higher prices are also reflected to investors wishing to sell any of their holdings.
Start here.
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This report is produced solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. This report is based on information obtained from sources believed to be reliable but no independent verification has been made, nor is its accuracy or completeness guaranteed.