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Puerto Rico Leads Biggest Wave of Muni Issuance in Three Months

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March 10 (Bloomberg) -- Puerto Rico is set to lead U.S. states and localities planning to sell $11 billion of long-term debt this week, the most this year, with yields near an eight-month low.

The Caribbean commonwealth plans to issue $3 billion of tax-exempt, general-obligation bonds as soon as tomorrow. It’s the first such sale for the U.S. territory in two years and comes after its credit rating was cut to junk last month by the three biggest rating companies.

Issuers from California to New York plan to sell the most long-term, fixed-rate securities since the period ending Dec. 13, data compiled by Bloomberg show.

Demand for tax-exempt bonds has pushed yields on 10-year benchmark municipal debt to 2.51 percent, close to the lowest since June, Bloomberg data show. That compares with a 2.79 percent yield on 10-year Treasuries. The ratio of the two interest rates, a measure of relative value, is about 90 percent, lowest since January 2013. The lower the figure, the more expensive munis are compared with federal debt.

To contact the reporter on this story: Michelle Kaske in New York at mkaske@bloomberg.net

To contact the editors responsible for this story: Stephen Merelman at smerelman@bloomberg.net Mark Tannenbaum

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