Understanding Muni Market Liquidity

Executive Summary

  • The US municipal market is large and robust, historically driving over three quarters of capital investment in America’s infrastructure.
  • A broad and diverse base of state and local issuers finance much of the country’s transportation system, social infrastructure, water resources, and energy generation and transmission.
  • Voters, governors, legislators and the president acknowledge the urgency to invest in America’s infrastructure.
  • It is estimated that $4.6 trillion must be invested in US infrastructure over the next eight years.
  • Orderly operation and liquidity of the municipal market is augmented by growing demand from overseas investors.
  • Well-resourced institutional investors can exploit mispriced liquidity premiums, especially during episodic retail-driven dislocations.

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