A Deep Freeze Hits Muni-Bond Market

Capital always withdrawals when reward (yield) does not compensate for the risks taken. Yields must rise or the deep freeze will continue without the aid of another buy America program.

Municipal-bond issuance is on pace for its lowest quarter in at least 11 years following a rush of borrowing late last year and as government borrowers struggle to get their budgets in order.

Through March 4, issuers have sold about $31.5 billion in debt, according to Thomson Reuters. The last time so little in bonds was sold by this point in the calendar was 11 years ago.

Depending on how much debt is sold this month—a figure hard to gauge since issuance calendars typically look only a week ahead—muni-bond sales in the first quarter may be the smallest amount since at least the same three-month period in 2000, which came in at $39.1 billion, according to Thomson.

"The entire market has been amazed at the lack of volume," said Christopher Mier, managing director at Loop Capital Markets.

Source: finance.yahoo.com