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  1st Quarter 2016 Municipal Market Performance and Highlights
Posted Under: Municipal

1st Quarter 2016 Municipal Market Performance and Highlights

  • While municipal bonds posted positive total returns during the first quarter of 2016, munis lagged other asset classes including U.S. Treasuries. The Barclays Municipal Bond Index returned 1.67% for the three months ended March 31, 2016, while the Barclays Municipal 10 Year Revenue Index had a total return of 1.98%. In comparison, the Barclays U.S. Treasury Index returned 3.20% for the three months ended March 31, 2016. (Source: Barclays, SIFMA.org)

  • Risk adjusted returns for municipal bonds relative to other asset classes remained attractive during the first quarter.

  • Retail demand for municipal bonds remained robust during the first quarter of 2016. Municipal fund flows increased 71.8% to $14.9 billion during the first quarter compared to $8.71 billion for the same time period a year ago. (Source: Barclays, Investment Company Institute)

  • New issue supply has not followed the significant increase in municipal fund flows. Primary market issuance declined just under 9% to $98.8 billion in the first quarter of 2016. During the first three months of 2015, issuance totaled $108.4 billion. (Source: Barclays, SIFMA)

  • Municipal credit quality remains healthy. During the first quarter, Moody's upgraded more municipal credit ratings than downgraded, the third such consecutive quarter. In addition, defaults continued to decline. According to data provided by MMA, the number of defaults totaled just 8 borrowers compared to 18 borrowers a year ago. One caveat to the continuing decline in number of defaulting borrowers, however, is the par value of defaults increased year-to-date due to Puerto Rico related nonpayers.

Click here for the full report.

Posted on Thursday, June 2, 2016 @ 1:48 PM • Post Link Share: 
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These posts were prepared by First Trust Advisors L.P., and reflect the current opinion of the authors. They are based upon sources and data believed to be accurate and reliable. Opinions and forward looking statements expressed are subject to change without notice. This information does not constitute a solicitation or an offer to buy or sell any security.
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