To time and price municipal bond trades, you need to understand the benchmarks dealers and analysts watch every day. The Bond Buyer publishes the indexes and indicators that drive that conversation.
Bond Buyer Indexes
The Bond Buyer publishes daily indexes that track new-issue municipal bond yields:
| Index | Composition | What It Measures |
|---|---|---|
| Bond Buyer 20 (BB20) GO Bond Index | 20 general obligation bonds rated A or above, with 20-year maturities | Average yield on new-issue GO bonds |
| Bond Buyer 11 (BB11) GO Bond Index | 11 general obligation bonds rated AA, with 20-year maturities | Higher-quality subset of GO bond yields |
| Bond Buyer 40 (Revenue Bond Index) | 40 long-term revenue bonds | Average yield on new-issue revenue bonds |
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
| Indicator | Definition |
|---|---|
| Visible supply | Total dollar amount of new municipal issues scheduled to come to market in the next 30 days |
| Placement ratio | Percentage of new issues sold relative to the total offered in the prior week |
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).
Related Topics
Disclosure infrastructure (the municipal-disclosure rule, continuing disclosure, material events, EMMA) is covered in Advertising and Communications. Real-time trade reporting via RTRS is covered in Settlement and Trading.