Muni Sales to Rise as Redemptions Fall After $377B Sales in 2015

  • Texas A&M University plans to sell $450 million of securities
  • Tax-exmpet market expanded 0.24 percent to $3.51 trillion

Municipal bond sales in the U.S. are set to increase in the next month while the amount of redemptions and maturing debt falls following a year when new issues rose 23 percent.

States and localities plan to issue $11.7 billion of bonds over the next 30 days, according to data compiled by Bloomberg. A week ago, the calendar showed $8.3 billion planned for the coming month. Supply figures exclude derivatives and variable-rate debt. Some municipalities set their deals less than a month before borrowing.

Board of Regents of Texas A&M University plans to sell $450 million of bonds, Orange County, California, has scheduled $334 million, Wisconsin Public Finance Authority will offer $333 million and Ysleta Independent School District, Texas, will bring $235 million to market.

Last year, new issues increased to $376.8 billion from $305.5 billion in 2014, Bloomberg data show. The U.S. municipal bond market expanded 0.24 percent to $3.51 trillion.

Municipalities have announced $6.6 billion of redemptions and an additional $9.9 billion of debt matures in the next 30 days, compared with the $20.1 billion total that was scheduled a week ago.

Fund Flows

Issuers from Minnesota have the most debt coming due with $1.1 billion, followed by California at $872 million and Indiana with $842 million. American Municipal Power Inc. has the biggest amount of securities maturing, with $490 million.

Investors added $1.26 billion to mutual funds that target municipal securities in the week ended December 23, compared with an increase of $647 million in the previous period, according to Investment Company Institute data compiled by Bloomberg.

Exchange-traded funds that buy municipal debt increased by $115 million last week, boosting the value of the ETFs 0.61 percent to $19 billion.

State and local debt maturing in 10 years now yields 88.414 percent of Treasuries, compared with 87.059 percent in the previous session and the 200-day moving average of 100.485 percent, Bloomberg data show.

Bonds of California and Pennsylvania had the best performance over the past year compared with the average yield of AAA rated 10-year securities, the data shows. Yields on California’s securities narrowed 8 basis points to 2.18 percent while Pennsylvania’s declined 7 basis points to 2.43 percent. Puerto Rico and New Jersey handed investors the worst results. The yield gap on Puerto Rico bonds widened 137 to 11.74 percent and Illinois’ rose 10 basis points to 3.77 percent.

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