Municipal trading volume rises to $844.47 billion in Q2, MSRB says

By Angela McDaniels

Tacoma, Wash., Aug. 7 - Investors traded $844.47 billion principal amount of municipal securities during the second quarter, according to statistics released by the Municipal Securities Rulemaking Board on Tuesday.

The amount is 6.7% higher than the $791.71 billion traded in the first quarter and 3.1% higher than the $819.18 million traded during the second quarter of 2011.

The total number of trades was 2.53 million, a 2% decrease from the second quarter of 2011.

Most active by amount

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

• The series A Exxon Mobil project revenue bonds due Aug. 1, 2035 issued by the East Baton Rouge Parish Industrial Development Board. Investors traded $5.21 billion principal amount of these bonds in 136 trades;

• The series B Exxon Mobil project revenue bonds due Dec. 1, 2040 issued by the East Baton Rouge Parish Industrial Development Board. Investors traded $5 billion principal amount of these bonds in 134 trades;

• The series 2010C first subordinated sales tax revenue bonds due Aug. 1, 2041 issued by the Puerto Rico Sales Tax Financing Corp. Investors traded $3.2 billion principal amount of these bonds in 781 trades;

• The series 2010A recovery zone facility bonds due Nov. 1, 2035 issued by the California Municipal Financing Authority for the Chevron USA Inc. project. Investors traded $2.54 billion principal amount of these bonds in 150 trades; and

• The series 2007A floating-rate notes due Oct. 15, 2012 issued by the Florida Hurricane Catastrophe Fund Finance Corp. Investors traded $2.41 billion principal amount of these bonds in 164 trades.

Most active by trades

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

• The series 2011 general obligation public improvement bonds due July 1, 2041 issued by the Commonwealth of Puerto Rico. Investors traded $1.19 billion principal amount of these bonds in 9,291 trades;

• The series U government facilities revenue refunding bonds due July 1, 2042 issued by the Puerto Rico Public Buildings Authority. Investors traded $1.72 billion principal amount of these bonds in 7,782 trades;

• The series 2012 A senior-lien revenue bonds due July 1, 2042 issued by the Puerto Rico Aqueduct and Sewer Authority. Investors traded $503.8 million principal amount of these bonds in 4,329 trades;

• The series 2012 health-care facilities revenue bonds due Nov. 15, 2041 issued by Rochester, Minn., for the Mayo Clinic. Investors traded $324.2 million principal amount of these bonds in 2,900 trades; and

• The series 2012A refunding public improvement bonds due July 1, 2037 issued by Puerto Rico. Investors traded $266.9 million principal amount of these bonds in 2,354 trades.

Trading activity

At $435.47 billion, customer purchases made up 51.6% of the trades made during the second quarter by par amount, compared with 50% in the second quarter of 2011.

Customer sales accounted for 29.7% of the par volume traded during the quarter, compared with 34% in the same quarter of the prior year.

Finally, 18.7% of the par volume traded during the second quarter was inter-dealer trades.

Of the par amount traded, 51.8% was fixed rate and 37.9% was variable rate. By number of trades, however, 92.9% was fixed rated.

The bulk of the par amount traded, 65.9%, was revenue bonds. G.O. bonds made up 22.5% of the trades by par amount.

The majority of the par amount traded, 85.5%, was tax exempt.

Daily averages by par amount

The average principal amount of securities traded each day was $13.4 billion in the second quarter.

MSRB said customer buying activity increased to an average daily par amount of $6.91 billion in the second quarter, the highest quarterly volume since the fourth quarter of 2010.

Customer sales averaged $3.98 billion per day in the second quarter, and inter-dealer trades averaged $2.51 billion per day.

Of the $13.4 billion average amount traded each day, $9.37 billion was traded in amounts of more than $2 million, the most of any category.

By source of repayment, an average of $3.02 billion of G.O. bonds and $8.83 billion of revenue bonds traded each day.

By tax status, an average of $11.45 billion of tax-exempt securities, $1.08 billion of taxable securities and $518.3 million of AMT securities traded each day.

Daily averages by trades

The average daily number of trades was 40,107 during the second quarter. The greatest amount of this average - 19,878 - was in the category of $25,000 or less.

MSRB said customer buying activity averaged 17,605 trades per day in the second quarter, inter-dealer trades averaged 14,165 and customer sales averaged 8,336.

By source of repayment, an average of 25,443 revenue bond trades and 13,402 G.O. bond trades were made each day.

By tax status, an average of 35,842 tax-exempt trades, 2,928 taxable trades and 1,316 AMT trades were made each day.

Sectors

By par amount, the most-traded sector was described as "other." The sector saw an average of $4.81 billion principal amount of municipals traded each day. It was followed by the education sector with $2 billion, the health sector with $1.48 billion, the utility sector with $1.44 billion and the various-purposes sector with $1.24 billion.

By trades, the most active sector was the "other" category with an average of 9,960 trades each day. It was followed by education with 9,246 trades, utility with 5,467 trades, tax-revenue with 3,736 trades and various-purpose with 3,731 trades.

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