Municipal trading volume flat at $838.22 billion in Q2, MSRB says

By Angela McDaniels

Tacoma, Wash., Aug. 7 - Investors traded $838.22 billion principal amount of municipal securities during the second quarter, according to second-quarter statistics released by the Municipal Securities Rulemaking Board on Thursday.

The amount traded is a decline of less than 1% from the $844 billion traded in the second quarter of 2012.

The total number of trades increased nearly 8% to 2.72 million in the second quarter from 2.53 million in the prior-year quarter.

MSRB said the higher number of trades and relatively unchanged par amount traded suggests a reduced average trade size, i.e., an increase in the number of smaller trades.

The par amount traded of fixed-rate securities increased to $462.7 billion in the second quarter from $437.8 billion in the same quarter of last year. Fixed-rate securities accounted for 55% of the total par amount traded in the second quarter, and variable-rate securities accounted for 37%.

Trading of revenue securities accounted for about 68% of the total par amount traded and 64% of the number of trades in the second quarter. General obligation bonds accounted for 23% and 33% of trading activity by par amount and number of trades in the second quarter, respectively.

Most active by amount

The following securities were the top five most-active securities during the second quarter by par amount:

• The State of Texas' series 2012 tax and revenue anticipation notes due Aug. 30, 2013. Investors traded $3.67 billion principal amount of these bonds in 203 trades;

• Puerto Rico Sales Tax Financing Corp.'s series 2007A sales tax revenue bonds due Aug. 1, 2054. Investors traded $3.29 billion principal amount of these bonds in 538 trades;

• The series A Exxon Mobil project revenue bonds due Aug. 1, 2035 issued by the East Baton Rouge Parish Industrial Development Board of Louisiana. Investors traded $2.57 billion principal amount of these bonds in 57 trades;

• The series 2012 Exxon Mobil project revenue bonds due Nov. 1, 2041 issued by the Gulf Coast Industrial Development Authority of Texas. Investors traded $2.51 billion principal amount of these bonds in 159 trades; and

• Puerto Rico Sales Tax Financing's series 2010C first subordinated sales tax revenue bonds due Aug. 1, 2041. Investors traded $2.35 billion principal amount of these bonds in 956 trades.

Most active by trades

The following securities were the top five most-active securities during the second quarter by number of trades:

• The New Jersey State Turnpike Authority's series A turnpike revenue bonds due Jan. 1, 2043. Investors traded $1.06 billion principal amount of these bonds in 2,478 trades;

• The series 2013B AMT environmental improvement refunding revenue bonds due May 1, 2043 issued by the Indiana Finance Authority for the Southern Indiana Gas and Electric Co. project. Investors traded $39.9 million principal amount of these bonds in 2,221 trades;

• The series 2013 refunding revenue bonds due April 1, 2042 issued by the District of Columbia for National Public Radio, Inc. Investors traded $289.8 million principal amount of these bonds in 2,137 trades;

• The series 2013A hospital revenue bonds due Nov. 15, 2043 issued by Tarrant County Cultural Education Facility Finance Corp. of Texas for the Baylor Health Care System project. Investors traded $337.4 million principal amount of these bonds in 2,044 trades; and

• The series 2013A health-care facilities revenue bonds due Nov. 1, 2046 issued by the North Carolina Medical Care Commission for the Novant Health obligated group. Investors traded $299.1 million principal amount of these bonds in 1,817 trades.

Daily averages by par amount

The average principal amount of securities traded each day was $13.10 billion in the second quarter.

MSRB said customer buying activity decreased to an average daily par amount of $6.5 billion in the second quarter, accounting for nearly half of the overall par volume. Second-quarter volume was 5.6% lower compared to the $6.9 billion traded in the same period last year.

Customer sales accounted for 30.6% of all trades in the second quarter in terms of par volume, compared with 29.7% in the second quarter of 2012.

Of the $13.10 billion average amount traded each day during the second quarter, $9.21 billion was traded in amounts of more than $2 million, the most of any category.

By security type, an average of $7.16 billion of bonds, $4.81 billion of variable-rate securities and $664.4 million of commercial paper traded each day.

By source of repayment, an average of $3.04 billion of G.O. bonds and $8.97 billion of revenue bonds traded each day.

By tax status, an average of $11.47 billion of tax-exempt securities, $982.6 billion of taxable securities and $547.5 million of AMT securities traded each day.

Daily averages by trades

The average daily number of trades was 42,470 during the second quarter. The greatest amount of this average - 21,903 trades - was in the category of $25,000 or less.

MSRB said the average daily number of trades of customer purchases was 17,251 in the second quarter, accounting for 40.6% of all trades.

By security type, an average of 41,243 bond trades were made each day, compared with 885 variable-rate security trades and 45 commercial paper trades.

By source of repayment, an average of 26,975 revenue bond trades and 14,163 G.O. bond trades were made each day.

By tax status, an average of 38,131 tax-exempt trades, 2,993 taxable trades and 1,337 AMT trades were made each day.

Sectors

By par amount, the most-traded sector was described as "other." The sector saw an average of $4.43 billion principal amount of municipals traded each day. It was followed by the education sector with $2.12 billion, the utility sector with $1.49 billion, the health sector with $1.37 billion and the various-purposes sector with $1.18 billion.

By trades, the most active sector was the "other" category with an average of 10,243 trades each day. It was followed by education with an average of 10,180 trades, utility with 6,105 trades, various-purpose with 3,924 trades and transportation with 3,787 trades.

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