Muni Supply Set to Decrease as Redemptions Surpass Sales

Within the next month as maturing debt and redemptions exceed sales of new securities, the US municipal bond market is set to decrease.

In data compiled by Bloomberg, having a gap between new debt and redemptions is a sure sign that both supply and demand within the $3.5 trillion municipal market will hit $27.3 billion over the next 30 days, this compared with a reduction from last month of $4.74 billion.

Also within the next 30 days is $10.2 billion of sales scheduled for states and localities. The data showed on the previous trading day, sales were at $10.9 billion. Of the supply figures, variable rate debt and derivatives were excluded. In addition, there were some municipalities that scheduled deals for less than a month prior to borrowing.

As announced by municipalities, $21.6 billion of redemptions, as well as another $15.9 billion for debt will reach maturity in December 2014.

With scheduled sales in the next few weeks is the Arizona Transportation Board, Dallas Area Rapid Transit, Posey County, and Indiana Economic Development for Midwest Fertilizer. Additional municipalities on the schedule include the Rhode Island Tobacco Settlement Finance Corporation and the Houston Independent School District.

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