52%: Growth of municipal bond supply

Municipal bonds turned in a strong January, despite a pick-up in issuance as the month wore on. According to Thomson Reuters, supply came in at $26.5 billion, which was 52% higher than last January and exceeded market expectations. Demand, in the form of fund flows, was a strong $7.2 billion. This was 24% greater than last year and seemed to confirm the continued investor appetite for income, as well as tax protection.

Generally positive US economic growth over the past several months is leading to growing tax revenue for states and smaller out-year budget gaps. The market now turns its focus to Washington and the pending March 1 sequestration cuts, and then to the April 15 tax payment date where the new, more onerous tax rate regime should remind investors of the importance of sheltering income via municipal bonds.

Source:  BlackRock

The D2 Capital Management Tax Free Bond Portfolio takes advantage of these opportunities.


The information contained in this article does not constitute a recommendation, solicitation, or offer by D2 Capital Management, LLC or its affiliates to buy or sell any securities, futures, options or other financial instruments or provide any investment advice or service. D2, its clients, and its employees may or may not own any of the securities (or their derivatives) mentioned in this article.

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