MSRB Publishes New Report on Municipal Variable Rate Securities Interest Rate and Trading Data

Date: July 21, 2011

Contact: Jennifer Galloway
             (703) 797-6600


Alexandria, VA – The Municipal Securities Rulemaking Board (MSRB) today published its second annual report summarizing interest rate, trading and other data on municipal variable rate securities reported to the MSRB between early 2009 and April 2011.

Included in the report is information on the size of the market for auction rate securities (ARS) and variable rate demand obligations (VRDOs), liquidity facilities associated with VRDOs, trading volume and interest rates and number of rate resets. The data summarized in the report, “Municipal Auction Rate Securities and Variable Rate Demand Obligations – Interest Rate and Trading Trends,” is available on the MSRB’s EMMA website, the official source for municipal market disclosures and data.

Variable rate securities provide access for municipal securities issuers to the lower interest rates that generally exist at the short end of the yield curve. The report notes the contraction in the municipal variable rate market that began in 2008 continued through the first four months of 2011 as the VRDO market decreased to $320 billion, compared to $339 billion in April of 2010. Par amount outstanding for ARS decreased 15 percent to $55 billion during the same period. The report also notes that over 40 percent of all of the VRDO liquidity facilities are set to expire by the end of 2012.

Other statistics in the MSRB report covering the two-year time period include:

• VRDO par volume traded increased to $1.41 trillion.

• The number of VRDO trades decreased 8.2 percent.

• Over 2.15 million municipal VRDO rate resets have been reported. .

• ARS par volume traded decreased 7.9 percent.

• The number of ARS trades decreased 59.3 percent

• Over 68,000 ARS rate resets have been reported.

• About 83 percent of ARS rate resets were set at the maximum rate.

The MSRB launched a transparency program in early 2009 to collect and publicly disseminate on EMMA interest rates and important descriptive information ARS and VRDOs. In May 2011, the MSRB expanded its program to provide information that allows investors to assess the level of demand, liquidity provisions and auction procedures for the securities.  For example, liquidity facility documents for VRDOs and bidding information for ARS are now available on EMMA.

The MSRB also publishes an annual Fact Book and quarterly municipal securities statistics, which are available electronically on

The MSRB protects investors, state and local governments and other municipal entities, and the public interest by promoting a fair and efficient municipal securities market. The MSRB fulfills this mission by regulating the municipal securities firms, banks and municipal advisors that engage in municipal securities and advisory activities. To further protect market participants, the MSRB provides market transparency through its Electronic Municipal Market Access (EMMA®) website, the official repository for information on all municipal bonds. The MSRB also serves as an objective resource on the municipal market, conducts extensive education and outreach to market stakeholders, and provides market leadership on key issues. The MSRB is a self-regulatory organization governed by a 21-member board of directors that has a majority of public members, in addition to representatives of regulated entities. The MSRB is overseen by the Securities and Exchange Commission and Congress.