21 December 2012

SIFMA issues 2013 Municipal Bond Issuance Survey

Compiled from responses provided by large and regional municipal bond underwriters and dealers, the report forecasts what type of activity is expected in the taxable and tax-exempt municipal securities market in 2013.

“With the country’s economy slowly, but steadily recovering, we’re continuing to see a strong appetite for municipal bonds among investors”, said Michael Decker, managing director and co-head of SIFMA’s Municipal Securities Division. “Our forecast remains highly dependent upon the outcome of the fiscal cliff negotiations and the fate of the tax-exempt status in the tax reform debate coming next year.”

Other highlights from the survey include:

• Projected long-term tax-exempt municipal issuance will reach $345 billion in 2013, a 7.7 per cent increase from the $320.4 billion issued year to date in 2012;
• Projected long-term taxable municipal issuance is expected to be $35.0 billion, an 11.4 per cent increase from actual issuance in 2012;
• Long-term alternative minimum tax (AMT) issuance is projected to rise to $13.0 billion in 2013, a 0.7 per cent increase from 2012 issuance;
• Variable-rate demand obligation (VRDO) issuance will rise to $15.0 billion in 2013, recovering from the 20-year low of $11.9 billion issued in 2012.

Survey respondents offered relatively uniform views on interest rates in the coming year. The federal fund rate was expected to remain unchanged in 2013, given the outcome-based triggers from the recent FOMC meeting. Forecasts include:

• Two-year Treasury note yield was expected to remain at 0.25 per cent until the first quarter of 2013 before gradually rising to 0.40 per cent end-December 2013; and
• 10-year Treasury note yield was expected to climb gradually from 1.6 per cent end-December 2012 to 1.97 per cent end-December 2013.

Full information

Full SIFMA 2013 Municipal Bond Issuance Survey

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