Last week, Barclays Global Investors issued the first municipal-bond exchange traded fund (ETF) followed by State Street Global Advisors. This happened around the same time that North Carolina announced it will borrow $200 million to finance jails, hospitals and other public works in the largest competitive sale of U.S. municipal bonds, reports Jeremy Cooke for Bloomberg.
The benchmark 30-year borrowing cost dropped since the highs in August, sending states, like North Carolina, and local governments to the market. Issuers want to take advantage of the dropped rates with an expected $18 billion to be spent over the next 30 days. Yields on top-generated obligation bonds due in 30 years averaged 4.5%, which is down from 4.8% from less than three weeks ago, according to Municipal Market Advisors. Tax-exempt bonds increased 1.6%, which outpaced returns of 0.7% by taxable obligations sold by the federal government and U.S. corporations, according to Merrill Lynch total-return indexes.
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