Quick Answer
The Bond Buyer publishes four municipal bond indexes that underwriters use to price new issues: the 11 and 20 GO Bond indexes (general obligation only), the 40 Bond Index (GO and revenue, published daily), and the Revdex-25 (revenue only). As with any bond index, rising yields mean falling prices.
Continuing with market-level analysis tools, the Bond Buyer indexes are specific to the municipal securities market. These indexes help underwriters and investors track muni bond yields and pricing trends.
What Is The Bond Buyer?
- A daily publication covering the municipal bond market
- Publishes several indexes that track yields and pricing in the muni market
- Used by underwriters to gauge current market conditions before bidding on new issues
What Are the Four Key Indexes?
| Index | Composition | Rating Level | Key Feature |
|---|---|---|---|
| 11 GO Bond Index | 11 general obligation bonds (selected from the 20 Bond Index) | Average ~Aa1/AA+ | Highest-quality GO bonds; most selective |
| 20 GO Bond Index | 20 general obligation bonds maturing in 20 years | Average ~Aa3/AA | Tracks high-grade GO bond yields |
| Municipal Bond Index (40 Bond / MBI) | 40 long-term municipal bonds (GO and revenue) | Average A or better | Broadest index; includes both GO and revenue bonds |
| Revenue Bond Index (Revdex-25) | 25 revenue bonds maturing in 30 years | Average ~A1/A+ | Revenue-bond-only yield tracking |
How Do the Indexes Relate to Each Other?
- The 11 Bond Index is a subset of the 20 Bond Index (its 11 bonds are selected from the 20)
- The 40 Bond Index (MBI) is the only one that includes both GO and revenue bonds, making it the broadest
- The Revdex-25 tracks only revenue bonds
- The 40 Bond Index uses price estimates standardized to a 6% coupon
- Publication frequency: the 40 Bond Index (MBI) is published DAILY; the 11 Bond, 20 Bond, and Revenue Bond (Revdex-25) indexes are published WEEKLY
How Should You Interpret the Indexes?
- Rising index yields = falling bond prices (the standard inverse relationship between yields and prices)
- Underwriters reference these indexes to price new municipal issues competitively
- Investors use them to gauge the overall direction of the muni market
Exam Tip: Gotchas
- The 11 Bond Index contains only general obligation bonds, a subset of the 20 Bond Index, not a separate universe of bonds
- The 40 Bond Index (MBI) is the only index that includes both GO and revenue bonds
- The Revdex-25 tracks revenue bonds only (the "Rev" in the name is the clue)
- The 40 Bond Index standardizes prices to a 6% coupon; questions may test this specific detail
Memory Aid:
- 11 and 20 = General Obligation only
- 40 = GO + Revenue
- Revdex = Revenue only
What Should You Check on Exam Day?
- The 11 Bond Index is a subset of the 20 Bond Index; both are GO-only.
- The 40 Bond Index (MBI) is the only index mixing GO and revenue bonds, and it standardizes prices to a 6% coupon.
- The Revdex-25 tracks revenue bonds only.
- Publication frequency: the 40 Bond Index is daily; the 11 Bond, 20 Bond, and Revdex-25 are weekly.
- Rising index yields signal falling bond prices.