We bought $1.5 billion on Friday at very attractive prices that have since improved substantially.
According to the Reuters reporters:
The $2.6 trillion municipal bond market has become a bargain-hunter’s delight, because hedge funds and other players that use leverage were forced to sell billions of dollars of bonds last week. February recorded the municipal bond market’s worst-ever performance, according to Merrill Lynch indices.
Gail MarksJarvis of the Chicago Tribune wrote earlier today:
In a topsy-turvy market of worry and low interest rates, investors are finding deals in a place they might not generally look—municipal bonds.
Typically, investors in municipal bonds accept yields lower than those on U.S. Treasury bonds because so-called munis let investors escape federal taxes on bond interest. But after several days of panicked selling in the municipal bond market, yields on the bonds are higher than Treasuries and have reached historically high levels.
Even retail investors are trying to get in on the deal. On Monday, the State of California sold 70% of the $1.75 billion of bonds it is selling to individuals. The state ended the retail presale period early because it wanted to preserve some of its new bonds for institutions.