Muni trading volume decreases to $842.09 billion in Q1, MSRB says

By Angela McDaniels

Tacoma, Wash., May 12 - Investors traded $842.088 billion principal amount of municipal securities during the first quarter, a decline of almost 8% from the $915.207 billion traded in the first quarter of 2010, according to first-quarter statistics released by the Municipal Securities Rulemaking Board on Thursday.

Compared to the fourth quarter of 2010, the par amount of municipals traded fell by 13.7%.

By number of trades, however, trading volume increased. The total number of trades rose 15.7% to 2.95 million in the first quarter from 2.55 million in the same quarter of 2010.

The number of trades in the first quarter was the second highest recorded since the MSRB began collecting trading information. The highest was the 2.99 million trades recorded in the first quarter of 2008.

Most active by trades

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

• The City of Chicago's series C-1 taxable project bonds due Jan. 1, 2035. Investors traded $971.2 million principal amount of these bonds in 4,483 trades;

• The Commonwealth of Puerto Rico's series C refunding public improvement bonds due July 1, 2037. Investors traded $572.4 million principal amount of these bonds in 3,587 trades;

• Chicago's series B taxable project bonds due Jan. 1, 2040. Investors traded $165.0 million principal amount of these bonds in 1,894 trades;

• The Port Authority of New York and New Jersey's consolidated 153rd bonds due March 15, 2039. Investors traded $261.1 million principal amount of these bonds in 1,772 trades; and

• The State of California's series A-2 revenue anticipation bonds due June 28, 2011. Investors traded $1.868 billion principal amount of these bonds in 1,768 trades.

Most active by amount

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

• The series B Exxon Mobil project revenue bonds due Dec. 1, 2040 issued by Louisiana's East Baton Rouge Parish Industrial Development Board. Investors traded $4.725 billion principal amount of these bonds in 83 trades;

• The series A Exxon Mobil project revenue bonds due Aug. 1, 2035 issued by the East Baton Rouge Parish Industrial Development Board. Investors traded $4.23 billion principal amount of these bonds in 132 trades;

• The first subordinated series B bonds revenue bonds due June 1, 2047 issued by California's Golden State Tobacco Securitization Corp. Investors traded $3.718 billion principal amount of these bonds in 63 trades;

• The bonds due June 15, 2046 issued by the District of Columbia Tobacco Settlement Financing Corp. Investors traded $3.713 billion principal amount of these bonds in 15 trades; and

• The series A Chevron project bonds due Dec. 1, 2030 issued by the Mississippi Business Finance Corp. Investors traded $3.249 billion principal amount of these bonds in 112 trades.

Trade type and size

The average principal amount of securities traded each day totaled $13.582 billion.

MSRB said customer buying activity reached an average daily par amount of $6.664 billion in the first quarter, accounting for 49.1% of the overall volume during the quarter. This compares to 51.0% in the first quarter of 2010 and 53.8% in the fourth quarter of 2010.

The average daily number of trades of customer purchases totaled 22,519 in the first quarter, accounting for 47.3% of all trades. Customer purchases accounted for 49.9% of all trades in the first quarter of 2010 and 50.5% in the fourth quarter of 2010.

Customer sales averaged $4.792 billion each day and accounted for 35.3% of all trades in the first quarter in terms of par volume, compared with 33.8% in the first quarter of 2010 and 31.2% in the fourth quarter of 2010.

MSRB said that despite the decrease in overall par volume traded, customer purchases of trades of $100,000 or less increased in terms of par volume and number of trades. About $570.3 million of customer purchases of trades $100,000 or less occurred in the first quarter, compared with $535.4 million in the first quarter of 2010 and $535.3 million in the fourth quarter of 2010.

There were 19,509 customer purchases of trades of $100,000 or less in the first quarter. This outpaced the 17,734 and 18,389 trades in the first quarter and fourth quarter of 2010, respectively.

Sectors

By par amount, the most-traded sector was described as "other." The sector saw an average of $5.018 billion principal amount of municipals traded each day. It was followed by the education sector with $2.043 billion, the utility sector with $1.448 billion, the health sector with $1.312 billion and the various-purposes sector with $1.279 billion.

By trades, the most active sector was the "other" category with an average of 11,559 trades each day. It was followed by education with 11,180, utility with 6,299 trades, various-purpose with 4,788 trades and transportation with 4,491 trades.

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