BondDesk announced Wednesday the launch of its first monthly municipal bond market report, which focuses on bond trading activity among retail investors.

The BondDesk Municipal Market Transparency Report, offered for free, is designed to provide financial advisors and sophisticated retail investors with visibility into trends in the muni market. BondDesk, based in Mill Valley, Calif., is a technology firm that operates a fixed income trading platform and provides wealth management solutions to financial advisors.

The launch comes as increased muni market uncertainty has driven fund flows out of the market. Yet individual bonds can still offer good value to investors, said Chris Shayne (left), the chartered financial analyst and director at BondDesk who writes the monthly report, in a phone interview last Thursday with AdvisorOne.

“Retail investors have two choices: they can invest in mutual funds or they can invest in individual bonds, and historically, all the coverage has been about what’s happening in the mutual fund market," Shayne said. "This report, for the first time that we know of, sheds light on what’s going on with individual municipal bonds for retail investors."

Typically, big institutions buy bonds in lots of $100 million or more. In the case of retail investors, however, bonds are purchased in "odd lot" transactions of 100 bonds or fewer, equal to less than $100,000 par value. But while the retail muni market is much smaller than the institutional market on a par value basis, it accounts for 70% of trade volume, Shayne said.

"With municipals, we’re all reading about the $17 billion mass exodus of investors from muni mutual funds during the month of November and December, but during that same time individual investors were aggressively buying individual municipal bonds because yields were going up," he said in the phone interview.

In his Municipal Market Transparency Report, Shayne wrote that both yields and spreads experienced a substantial spike in November, triggering a wave of aggressive buying from retail investors. The initial increase was caused by "excessive new issuance in November that swamped investor demand, driving down prices and pushing up yields," he wrote, adding that 2010 was a record year for issuance, with the fourth quarter boosted by municipalities scrambling to issue debt before the end of the Build America Bonds program in 2011.

After reading the BondDesk muni report, Dawn Mangerson, a senior portfolio manager with McDonnell Investment Management of Oak Brook, Ill., called the report “accurate” and timely in light of the recent upheaval in the bond market.

“I think we need to educate people about the muni market because it’s a huge retail market, and unfortunately, the headline news is misplaced. It gets scary for people,” Mangerson said. “There are 50,000 different municipal issuers and so many individual credits. Anything that helps them understand that you do have to look at each credit individually is a good thing.”

The monthly report, available as a free PDF at, provides analysis and data on a variety of key market trends.

Highlights include:

  • Market Recap.  A summary of the previous month’s trading activity in the retail muni market as well as the economic events that impacted demand.
  • Yield/Spread History. An analysis of median yields & spreads that provides a context for the current rate environment.
  • Yield Matrix. A table containing median yields for each credit rating and maturity.
  • Buy/Sell Ratios. A table listing the states with the highest and lowest buy/sell ratios (indicating market momentum).

“The BondDesk Municipal Market Transparency Report is an important and timely complement to our existing Corporate Market Transparency Report,” said BondDesk CEO Peter Crosbie in a statement. “Munis have been all over the news lately, with talk of imminent defaults and aggressive selling by mutual fund investors. But that’s only part of the story — retail investors in the muni bond market have actually been aggressive buyers recently. Our new report provides this type of insight and analysis that is not easily accessible today.”

Read Chris Shayne’s “Comparing Individual Bonds With Bond Funds for Client Portfolios, Part I” at