Municipal Bond Forum
How new HQLA bank rules help the muni market
Q
You have often written about the dearth of munis available for individual investors to purchase. Won’t new bank rules regarding high quality liquid assets (“Reversal on Bank Rules a Win For Muni Bonds”) make things even worse? Why would you applaud a big new investor that can purchase much more and make things even more scarce?
A
James A. Klotz responds:
Rule changes for financial center banks we referred to in the article are good for the overall municipal bond market as they will provide valuable liquidity to individual investors seeking to liquidate their holdings.
As far as the availability of municipal bonds, issuance picks up and slows down as a result of various market forces. However, we’ve never witnessed a situation in which investors were unable to acquire quality bonds. We’ve helped clients find the bonds that suit their investment objectives for more than 40 years.
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The responses provided in this forum are meant to address specific questions posed by investors about their municipal bonds and to provide market insight for our general audience. Please note, your investments, objectives, results and experience may differ significantly. Our answers and any potential strategies discussed should not be construed as a solicitation to buy nor sell any security or investment product. All investing entails risk.