Municipal Bond Forum

How new HQLA bank rules help the muni market

You have often written about the dearth of munis available for individual investors to purchase.  Won't new bank rules regarding high quality liquid assets (“Reversal on Bank Rules a Win For Muni Bonds”) make things even worse?  Why would you applaud a big new investor that can purchase much more and make things even more scarce?
R.K., Texas

James A. Klotz responds:

Rule changes for financial center banks we referred to in the article are good for the overall municipal bond market as they will provide valuable liquidity to individual investors seeking to liquidate their holdings.As far as the availability of municipal bonds, issuance picks up and slows down as a result of various market forces. However, we’ve never witnessed a situation in which investors were unable to acquire quality bonds. We’ve helped clients find the bonds that suit their investment objectives for more than 40 years.