Roll, roll, roll your note, gently down the curve.

  • In this 3Q16 Muni Commentary, we provide a round-up of yields across the muni spectrum.
  • We also discuss whether investors should consider retaining and rolling short-term notes, rather than exercising the put option, now that short-term rates have spiked.
  • We provide understanding around underfunding pension debacles in states such as Illinois and New Jersey , as well as a guide on upcoming regulatory changes.

As a result of money market reform mandated by the SEC which took effect on October 14, there has been a significant change in the interest rates offered by short-term tax-exempt variable rate demand notes (VRDNs).

Now that yields on these short-term rates have spiked, investors who wish to maintain liquidity in tax-exempt instruments may want to consider retaining and rolling these notes, rather than exercising the put option.

Please see important disclosures at the end of the article.

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