Municipal Market Sees Sharp Drop in 2000.

• Position: Brief Article

A dramatic decline in tax-exempt bond issuance led to the worst month for the municipal primary market in five years. Thirty-one refunding deals worth $427.3 million were sold in January, compared to the 290 issues worth $4.34 billion during the same period last year. This represents a decrease in issuance of 90.2 percent. There are several reasons for the drop. Issuers are not experiencing cash shortages and consequently are scaling back their borrowing programs. Transportation and education, which had been expected to lead the market, may have had some deals accelerated to avoid Y2K problems. In addition, high-issuance states have all issued substantially less long-term debt. But the main reason for this decrease in volume is interest rates, which...