Individual investors liked what they saw in the municipal bond market in the second quarter, increasing their holdings of individual bonds to almost $918 billion, representing nearly half the $2.54 trillion of total municipal debt.
In contrast, individuals held $881.1 billion in tax-exempt debt during the first three months of the year, according to Federal Reserve Board data. Households remain, by far, the largest segment of bondholders.
Over the past year, bond issuance has been relatively brisk, reflecting economic growth in the nation, experts told The Bond Buyer. The 4.2%, or $36.8 billion rise in individual holdings over the first quarter occurred as investors took advantage of the unusually high yields of munis compare with Treasury bonds, while interest rates edged up and the stock market was relatively flat.
In the year ending June 30, households owned $852 billion in municipal debt. The new figures represent a $65.9 billion increase in individual holdings over the past 12 months.
Other significant holders of muni bonds include money market funds ($398.9, up 16.3%), mutual funds ($369.2 billion, a rise of 2.9%) and property and casualty insurance companies ($345.3 billion, up 2%).