Fed report puts municipals at $3.65 trillion at end of fourth quarter

By Toni Weeks

San Luis Obispo, Calif., March 12 – The total amount of municipal securities and loans outstanding was up a tick at $3.65 trillion at the close of the fourth quarter of 2014, compared to the $3.63 trillion at the end of the third quarter, according to the Z.1 flow and outstandings report released by the Federal Reserve on Thursday.

In comparison, the amount outstanding stood at roughly $3.67 trillion at the end of the fourth quarter in 2013. The mark stood at $3.71 trillion at the end of 2012, $3.72 trillion at the end of 2011, $3.77 trillion at the end of 2010, $3.67 trillion at the end of 2009 and $3.52 trillion at the end of 2008.

Of the $3.65 trillion outstanding at quarter-end, the majority – $2.91 trillion – was issued by state and local governments, followed by $518.4 billion issued by non-financial corporate businesses and $223.1 billion issued by non-profit organizations.

On the buyside, the household sector held $1.54 trillion of the securities outstanding at the end of the fourth quarter, followed by mutual funds with $658.4 billion, U.S.-chartered depository institutions with $451.5 billion, property-casualty insurance companies with $326.4 billion and money market mutual funds with $281.7 billion.

Flows up by $35.5 billion

On a seasonally adjusted annualized and net basis, total liabilities in the municipals market increased by $35.5 billion during the fourth quarter of 2014, according to the report.

The fourth-quarter increase and a $15.7 million increase in the second quarter were balanced against decreases of $38 million and $88.5 million in the first and third quarters, respectively. As a result, there was a decline for the full year of $18.8 billion.

This is the fourth consecutive year of declines. The amount of liabilities outstanding fell by $43.2 million in 2013, $4.9 million in 2012 and $52.8 billion in 2011. This followed three years of increases: a $99.7 billion increase in 2010, a $155.3 billion increase in 2009 and a $92.4 billion increase in 2008.

The fourth quarter’s $35.5 billion increase was driven by a $60.8 billion increase for mutual funds and a $41.1 billion increase in U.S.-chartered depository institutions. Money market mutual funds fell by $60.7 billion, and household sector saw a $31.9 billion decrease.

In comparison, liabilities increased by $697.9 billion for Treasuries, $431 billion for agencies and $384.1 billion for corporate and foreign bonds in the fourth quarter on a seasonally adjusted annual basis.

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