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US Municipal Bond Credit Report, 2010 Q4 and Full Year

The municipal bond credit report is a quarterly report on the trends and statistics of U.S. municipal bond market, both taxable and tax- exempt. Issuance volumes, outstanding, credit spreads, rating changes, highlights and commentary are included.

Report Summary

According to Thomson Reuters, long-term municipal issuance volume, including taxable and tax-exempt issuance, totaled $132.3 billion in the fourth quarter of 2010, a sharp increase of 41.2 percent from $93.7 billion in 3Q'10 and a 10.3 percent increase from 4Q'09. The large increase in issuance is primarily due to the then pending expiration of the BAB program, with issuers rushing to sell BABs before the program expired on December 31, 2010; excluding taxables, issuance totaled $73.6 billion, an increase of 16.0 percent and a decline of 12.6 percent, respectively, from 3Q'10 and 4Q'09.

For the full year 2010, long-term municipal issuance volume totaled a record high $430.1 billion, 5.7 percent above the $406.8 billion issued in 2009. Taxable issuance rose as a percentage of the total due to the popularity of the BABs program and its expiration; which, in turn, may lead to lower issuance in 2011. Moreover, the loss of the BABs program, under which issuance was concentrated in longer maturities, will mean increased new-issue supply in the longer-maturity tax-exempt market going forward.

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