The U.S. financial markets improved in the second quarter with many market observers anticipating an economic recovery later this year. Treasuries yields rose throughout the quarter as the government issued substantial amounts of new debt and investors continued to reverse the extreme flight to quality. The yield ratio of AAA-rated 10-year municipals to that of comparable 10-year Treasury securities ended the second quarter of 2009 at 95 percent, still above the pre-crisis average of 85 percent in 2007, but well below the level of 174 percent recorded at the end of 2008. AAA-rated municipal bond yields ended 2Q’09 at 3.37 percent, down from 3.45 percent at the end of the first quarter and 4.00 percent at the end of the same year-earlier period. The SIFMA Municipal Swap Index yield declined to 0.30 percent at end-June compared to 0.54 percent on March 25. As of the end of the second quarter, the 52-week average was 1.40 percent.

About the Report

The municipal bond credit report is a quarterly report on the trends and statistics of U.S. municipal bond market, both taxable and tax-exempt. Issuance volumes, outstanding, credit spreads, rating changes, highlights and commentary are included.

Credits

SIFMA Research

• Managing Director, Director of Research: Kyle Brandon
• Research Analyst: Paul Rainy

Municipal Division

• Managing Director, Associate General Counsel: Leslie Norwood