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A 10-year low of new municipal bond issuance

Volume Lowest in 10 Years
Munis Ended 2011 At $295 Billion
Tuesday, January 3, 2012
By Taylor Riggs

A 10-year low of new municipal bond issuance is what was on everyone’s mind in 2011.

Last year, only $295 billion of bonds were issued, down almost 32% from 2010 when $433 billion was issued. It was the lowest amount of issuance since 2001.

“It looks like we may be in a new age of austerity for state and local governments in terms of taking on new debt and funding new projects,” said Rob Williams, director of fixed income and income planning at Charles Schwab. “We saw the impact of that in 2011 driving volume issuance down.”

“The returns in munis have beaten just about every other fixed-income sector other than Treasuries, and that’s counter to what many would have expected going into the year,” Williams said. “Lower defaults and falling Treasury yields played a part, but the supply equation has been a factor also.”

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