Municipal bond market – Readily absorbs a bump up in new issue supply

The S&P Municipal Bond Index has returned 5.74% year to date as yields have remained relatively stable as the market absorbs new issue supply. High yield municipal bonds tracked in the S&P Municipal Bond High Yield Index have continued to outperform their corporate junk bond counterparts by returning 9.67% year to date. As the yields for U.S. corporate junk bonds has hit lows well below 5%, municipal high yield bonds in the S&P Municipal Bond High Yield Index have remained over 6%.

  • Longer dated municipal bonds have outpaced U.S. Treasuries with the S&P Municipal Bond 20 Year High Grade Index returning 12.48% year to date. The 3.75% tax-exempt yield of these bonds remains over 25bps cheaper than the 30 year U.S. Treasury Bond.
  • Tobacco settlement bonds have rallied all year as the S&P Municipal Bond Tobacco Index has returned over 13.2% as yields have fallen by over 100bps to end at 5.9%.
  • Yields Returns Munis 06 20 2014

The posts on this blog are opinions, not advice. Please read our disclaimers.

Leave a Comment

Your email address will not be published. Required fields are marked *

You may use these HTML tags and attributes: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>