SIFMA today released its 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.
Respondents expect total municipal issuance, both short- and long-term, to reach $458.0 billion in 2013, up from $420.3 billion already issued in 2012. Both short-term and long-term issuance is expected to rise in 2013, with $65.0 billion in short-term notes expected in 2013, compared to $55.6 billion issued in 2012; and $393.0 billion in long-term bills expected in 2013, compared with $364.7 billion issued in 2012.
“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 percent 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 percent 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 percent 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.
Interest Rate Forecast
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 percent until the first quarter of 2013 before gradually rising to 0.40 percent end-December 2013; and
- 10-year Treasury note yield was expected to climb gradually from 1.6 percent end-December 2012 to 1.97 percent end-December 2013.
You can view a full copy of the SIFMA 2013 Municipal Bond Issuance Survey here:http://www.sifma.org/research/item.aspx?id=8589941273
Additional information about SIFMA’s activities and developments in the municipal securities market can be found at www.sifma.org/muni. For individuals and investors interested in learning more about investing in the fixed-income markets, information can be found online at the SIFMA-sponsored educational website Investing in Bondsat www.InvestingInBonds.com.
