Salient to Investors:

Cities, counties and hospital districts in Texas raised 10 percent of their issuance using certificates of obligation which don’t need to go before voters, unlike GO bonds. The issuance faces tighter restrictions under bills in Texas, North Carolina and New York that would make it tougher to borrow without taxpayer approval.

The SIFMA said these securities make up more than 60 percent of the $3.7 trillion municipal market. Matt Fabian at Municipal Market Advisors says limiting the securities might shrink the supply of bonds and boost prices, delay investment in roads and bridges, and worsen the current imbalance of supply and demand – bullish for munis.

Citigroup said after the recession ended in 2009, more fiscal austerity has contributed to a decline in new financings to the lowest in at least a decade. George Friedlander at Citigroup said potential rejections by voters would slow sales further, a direct conflict with long-term issues like infrastructure, maintenance, repair and rebuilding.

John Hallacy at Bank of America Merrill Lynch said many feel there is not enough oversight, though officials are not being irresponsible and just issuing debt for the sake of issuing debt.

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