Muni Bond Prices

unicipal bond prices available to all

The world of municipal bonds is more often than not viewed as a confusing one, mainly because price information hasn't readily available to individuals investing in the $1.4 trillion market.

The big institutions - the market makers - get their price information from sources that retail buyers can't get their hands on. Which means individuals are sometimes paying dearly for the advantages of owning a bond that has tax-exempt interest income.

Managing Your Money

For example, if you bought a tax-exempt bond from a small issuer that doesn't trade very often, how do you know what it's worth when you want to sell it? Where do you get price information independently without relying solely on your broker? Buyers can be ripped off in a big way by brokers that cash in on this lack of information by jacking up prices substantially.

Help is on the way from the Bond Market Association, a trade group that represents about 200 securities firms and banks that underwrite, trade and sell debt securities, domestically and internationally.

Starting Monday, the association began posting on its site - located at www.investinginbonds.com - daily municipal bond transactions for free, with information on prices, yields, credit ratings and more. The information is taken from data provided by the Municipal Securities Rulemaking Board.

The MSRB, a kind of watchdog, was established by Congress in 1975 to develop rules regulating firms that underwrite and trade municipal bonds. The MSRB's data is available to subscribers - mostly information vendors - for an annual fee of $15,000.

An MSRB spokesman says the organization was "extremely pleased" that the data would be distributed to individual investors for free.

Bond Market Association spokesman Michael Dorfsman said the new Web site adds information that isn't included in the MSRB's reports, such as ratings from Moody's, Standard & Poor's and Fitch IBCA. Investors also have the option of sorting issues according to characteristics such as their maturity, yield and state of issuance for added convenience, Dorfsman said.

Meanwhile, the association is taking steps to improve price transparency in the corporate market - where price information is also murky - so that investors can make more informed decisions.

The Bond Market Association announced last Friday that it is asking pricing and information vendors to submit formal proposals to create a system that would electronically report trading between dealers of investment grade corporate bonds on an immediate basis. See press release.

The proposals must be in by ec. 30, Dorfsman said.

The association said it expects to publicly provide information on inter-dealer corporate trades - which accounts for a significant portion of corporate bond trading - by April 30.

Written By Julie Rannazzisi, CBS MarketWatch

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