Market Analysis for Municipal Securities

To properly advise clients on municipal bond timing and pricing, you need to understand the market benchmarks and disclosure systems that drive the muni market.

What You'll Learn

• The three Bond Buyer indexes and how they differ (BB20, BB11, BB40)
• How visible supply and placement ratio signal market direction
• What issuers must disclose under SEC Rule 15c2-12
• How EMMA provides transparency for municipal securities

Bond Buyer Indexes

The Bond Buyer publishes daily indexes that track new-issue municipal bond yields:

Key facts:

• The BB20 includes bonds rated A or above; the BB11 is a higher-quality subset with bonds rated AA
• Because the BB11 uses higher-rated bonds, its yield is lower than the BB20 (higher credit quality = lower yield)
• These indexes are used as benchmarks for pricing new issues and assessing market trends

Think of it this way: The BB11 is the "honor roll" of the BB20. It filters for only the highest-quality bonds (AA), so investors accept a lower yield for that extra safety. If you remember that higher quality always means lower yield, the BB11-vs-BB20 relationship clicks into place.

Exam Tip: Gotchas

• The BB11 yield is LOWER than the BB20 yield (counterintuitive if you think "11 < 20 = lower"). The BB11 uses higher-rated AA bonds, so investors demand less yield.
• All three Bond Buyer indexes track new-issue yields, not secondary market prices.

Market Indicators from The Bond Buyer

How to interpret:

• High visible supply = many new bonds coming to market, which increases supply and puts upward pressure on yields (downward on prices)
• High placement ratio = strong demand (a large percentage of new issues sold), meaning the market is absorbing supply well
• Low placement ratio = weak demand; issues are not selling, which may signal rising yields ahead

Exam Tip: Gotchas

• Visible supply is forward-looking (next 30 days); placement ratio is backward-looking (prior week). The exam tests whether you know which direction each one faces.
• High visible supply puts upward pressure on yields (more supply = higher yields to attract buyers).

Continuing Disclosure (SEC Rule 15c2-12)

Issuers entering into continuing disclosure agreements must report material events to EMMA (Electronic Municipal Market Access) within 10 business days, including:

• Principal and interest payment delinquencies
• Unscheduled draws on reserves or credit enhancements
• Bond rating changes (upgrades, downgrades, withdrawals)
• Defeasances
• Bond calls
• Tax status changes (IRS determination that interest is taxable)
• Bankruptcy, receivership, or similar events
• Tender offers, mergers, or significant financial obligation incurrence

Exam Tip: Gotchas

• Material events must be reported within 10 business days, not calendar days.
• The disclosure obligation applies to the issuer, not the underwriter or dealer.

EMMA (Electronic Municipal Market Access)

• Operated by the MSRB (Municipal Securities Rulemaking Board); designated by the SEC as the official source for municipal securities data
• Provides free public access to:
  • Real-time trade prices via RTRS (Real-Time Transaction Reporting System)
  • Official statements and preliminary official statements
  • Continuing disclosure documents (annual financials, material event notices)
  • Credit ratings
  • Advance refunding documents

Trade reporting:

• Municipal securities transactions must be reported to EMMA via the Real-Time Transaction Reporting System (RTRS) within 15 minutes of execution
• This data is publicly available on EMMA at no cost

Exam Tip: Gotchas

• EMMA is the muni market's equivalent of EDGAR. It is the single official repository where continuing disclosure filings, trade prices, and official statements are posted.
• Trade reporting to RTRS must happen within 15 minutes of execution, not end of day.
• EMMA is free to the public. No subscription or account is required to access trade data and disclosures.