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U.S. municipal bond sales fall in November as refundings shrink

Wednesday, 27 Nov 2013 | 12:49 PM ET

WASHINGTON, Nov 27 (Reuters) - Sales of U.S. municipal bonds shrank to $23.16 billion this month, as debt refundings dropped sharply from a year ago, according to preliminary Thomson Reuters data released on Wednesday.

Issuance this month was nearly 30 percent lower than in November 2012 and slightly less than the $26.46 billion of debt sold in October 2013, marking the slowest November since 2000.

Year-to-date issuance of $287.5 billion is running 14 percent below the first 11 months of 2012, with refundings 28.9 percent lower than last year. On the flip side, new money sales are running 11.1 percent higher.

November marked the smallest level of issuance for refunding bond sales since February 2011, when issuers brought $5.79 billion to market. Issuers this month sold $7.02 billion of refunding bonds, 65 percent less than November 2012, Thomson Reuters data through Nov. 27 showed. Last year municipalities rushed to take advantage of record-low interest rates.

In comparison, issuers sold more new money bonds this month than in the same month last year. They brought $16.15 billion to market in 501 deals, compared with $12.56 billion in 495 deals in November 2012.

This year interest rates have risen to highs not seen since early 2011. The market was rattled by signals the Federal Reserve could soon reduce its $85 billion in monthly bond purchases and by the financial deterioration of Puerto Rico and Detroit.

Yields for top-rated 30-year bonds started the year at 2.86 percent on Municipal Market Data's benchmark scale. On Tuesday, they closed at 4.10 percent. Yields on triple-A-rated 10-year bonds began 2013 at 1.78 percent and were 2.65 percent on Tuesday, according to MMD, a Thomson Reuters company.

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