Municipal bonds have worst first quarter since 2000

(Compliments to Le Fly)

Minicipal bond issuance is looking to have a terrible year, as new issues are at their lowest level since the turn of the millennium. Since March 4, muni issuers have only managed to sell around $31.5 billion in debt.

In the tumultuous early days of 2000, $39.1 billion in muni bonds were sold. The lack of sales spells continued austerity as pressure mounts on state and local governments.

The decline has been in part attributed to the end of the Build America Bond Program, which helped to subsidize municipal borrowing activity. However, such a powerful drop off has even some of those expecting decreased activity in a state of disbelief.

The question that should be on the minds of market participants: is this market drawdown because municipalities aren’t issuing new debt, or because no one wants to buy it?

In conjunction with the powerful political grassroots movements calling for spending reform across the country, the inability of municipalities to restructure their debt may give further ammunition to those calling for government austerity.

Which has everyone else wondering, what will that do to national asset prices?