Related: Municipals Offer Safe Yields

Bloomberg Barclays Municipal Bond Total Return Index

The benchmark Bloomberg Barclays Municipal Bond Total Return Index gained 0.87% in the second quarter after declining 1.11% in the first quarter, the biggest decline of any first quarter in the past 15 years.

Vikram Rai, head of municipal strategy at Citigroup, argued that the pullback in muni supply was a result of Congress’s decision last year to end tax exemptions for early refinancing on outstanding muni debt. Borrowers rushed to sell munis amid talk of other legislative proposals, like a ban on tax-exempt issuance by hospitals and universities, which weren’t ultimately implemented.

“The rush to market toward the end of 2017 emptied out a lot of the forward pipeline,” Rai said.

Furthermore, the splash from the 2008 financial crisis is still making waves. Muni bonds typically are eligible to refinance a decade after they are issued, and issuance of new debt plunged 24% in 2008, which has lead to a smaller-than-typical group of bonds eligible for refinancing this year.

For more information on the munis market, visit our municipal bonds category.