The Market for New Issues of Municipal Bonds: The Roles of Transparency and Limited Access to Retail Investors

53 Pages Posted: 20 Jan 2012

Date Written: January 19, 2012

Abstract

I examine how transparency and inter-dealer trading affects prices investors pay in municipal bond offerings. Real-time trade reporting for municipal bonds started January 31, 2005. The dispersion of purchase prices fell sharply at that time. There was little impact on average markups for most trades, but they increased for purchases of more than $100,000. Bonds often pass through a series of dealers before being placed with a buy and hold investor. As the inter-dealer trades progress, trade sizes decline and trade prices rise. Markups on investor purchases increase with the amount of inter-dealer trading before the trade.

Keywords: municipal bond, dealer market, transparency, regulation, offering

JEL Classification: G00, G10, G18, G24, G28, H70, H74

Suggested Citation

Schultz, Paul, The Market for New Issues of Municipal Bonds: The Roles of Transparency and Limited Access to Retail Investors (January 19, 2012). Available at SSRN: https://ssrn.com/abstract=1988548 or http://dx.doi.org/10.2139/ssrn.1988548

Paul Schultz (Contact Author)

University of Notre Dame ( email )

361 Mendoza College of Business
Notre Dame, IN 46556-5646
United States

Do you have a job opening that you would like to promote on SSRN?

Paper statistics

Downloads
381
Abstract Views
1,687
Rank
148,841
PlumX Metrics