What is the placement ratio?
The placement rate, also known as the acceptance rate, calculates the percentage of new municipal bonds offered over $ 1 million purchased the previous week.
- The placement rate, also known as the acceptance rate, calculates the percentage of new municipal bonds offered over $ 1 million purchased the previous week.
- High placement rates indicate a strong municipal bond market and a high level of interest from bond underwriters. Conversely, a low ratio indicates a slump in the market and a lack of interest in underwriters.
- Data on bonds issued and sold during the week will be edited at the close of business on Friday and will be reported on Monday as follows: Bond buyer..
Understand placement rate
The placement ratio is an indicator of the overall situation of the municipal bond market. This ratio compares the number of newly issued bonds (competitive and negotiated) in a week to the number of bonds sold in that week. In effect, the issuance ratio is the amount of newly issued dollars issued by the underwriter to investors and is expressed as the ratio of new municipal bond offerings last week.
..Placement ratio= =Available municipal bondsSold local bonds....
The higher the placement ratio, the stronger the overall strength of the municipal bond market. A high ratio indicates a high level of interest from bond underwriters. Conversely, a low ratio indicates a slump in the market and a lack of interest in underwriters.
For example, suppose a $ 100 million face value municipal bond issued last week. Of this amount, $ 70 million was sold under syndicate underwriting. The placement rate is $ 70 million ÷ $ 100 million x 100% = 70%. This ratio shows stakeholders how well the market has absorbed the bonds offered last week.
Record of placement rate
Weekly bond data sold and issued is edited and published weekly by. Bond buyers, A financial publication that covers the municipal bond market. Newspapers publish a number of indexes, one of which is the Bond Buyer 20 Index. This index is used by Moody’s to track the average yield of 20 grade Aa2 and Standard & Poor’s grade AA 20 general obligation municipal bonds and to determine the interest rate on new issuance of general obligation bonds.
Bond Buyers Placement rates are summarized every Friday at the end of business and reported on Monday. You can also access the publication archive to view the placement rate for the previous week and determine long-term trends.
The placement ratio is used as an indicator of where the bond market is heading. A significant inventory of unsold bond issuance in the primary market indicates a recession in the secondary market.If Bond buyer It states that the placement rate in the primary market has increased since the last reading. This suggests that the market is in high demand compared to supply and is a favorable market for issuers to enter.