| Maturity | 12/31/2014 | 6/30/2015 | Change |
| 5 Year | 1.32% | 1.38% | 6 basis points |
| 10 Year | 2.04% | 2.28% | 24 basis points |
| 15 Year | 2.33% | 2.77% | 44 basis points |
| 20 Year | 2.58% | 3.01% | 43 basis points |
| 25 Year | 2.77% | 3.20% | 43 basis points |
| 30 Year | 2.86% | 3.28% | 42 basis points |
By every measure (see post from Thursday, 05/28/2015) I believe cash available for reinvestment in muni portfolios will continue to outstrip new issuance through the summer months (negative $5 billion-$10 billion), setting the stage for a potentially stronger finish, in which demand surpasses supply, to the calendar year-end. This scenario is not too dissimilar to that of 2013-2014, when good performance emerged at the end of the 2013 year.
Finally, another backward-looking but positive longer term sign for the muni market: According to Smith’s Research & Gradings, the major agencies that rate municipal debt upgraded 447 issuers while downgrading 402 during the first six months of 2015. By comparison, in 2014 upgrades versus downgrades were 988 to 682, respectively. The inference drawn from these numbers is that the underlying economic environment is improving for those municipalities that issue debt. This is good news for investors who should be encouraged to know that credit quality continued to improve broadly across the spectrum of municipal bonds.
The Barclays Municipal Bond Index is considered representative of the broad market for investment grade, tax-exempt municipal bonds with a maturity of at least one year. The Barclays High Yield Municipal Bond Index is considered representative of the broad market for below investment grade, tax-exempt municipal bonds with a maturity of at least one year.