That buzzing you hear in the municipal market is the swaps nest.

In early 2000s, many municipal issuers entered into IR Swap agreements because interest rates had fallen to, at the time, very low levels.  The idea was that funding costs would fall as interest rates rose because many municipal issuers were paying a fixed interest rate and receiving a floating interest rate.

As a reminder, an IR Swaps agreement is between two private parties where one stream of future interest payments is exchanged for another. For instance, a municipal issuer would engage a bank and exchange a fixed payment for a floating payment linked to an index, like LIBOR.

Well, interest rates did not rise but fell and have been held at the zero bound for almost seven years.  Mark-to-market pricing further excited the swap nest because as interest rates fell the fixed rate payer saw the value of the IR Swap decline.