Please give me an overview of municipal bond market research, data, or other muni market products IHS Markit is providing.
Hello! Thanks for asking us to give an overview of municipal bond market research, data, or other muni market products IHS is providing.
The short version is that the additional products that IHS Markit provides are: reference data, indices, security finance and DeltaOne ETP data. IHS Markit reviewed trade and quote activity on approximately 570,000 unique municipal bonds from January 2015 through March 2016.
Below is a deep dive of my methodology and findings.
I researched corporate websites, trusted media sites and published articles in order to find the most relevant answer to the question. After extensive search I discovered there is very limited information on how IHS Markit products work around the muni market. However, I was able to find some very interesting data which includes a published customer update as well as the results of a research/study conducted by IHS Markit. These were able to add some substance and the most relevant answer has been provided.
It has already been established that IHS Markit provides pricing data for municipal bonds. They provide growing companies with the information and data they need to scale their business and enhance their products.
- Reference data: supports the credit derivative, bond, equity,
syndicated loan and legal entity data needs of the financial
markets. This consists of CDs, bonds and loans.
- Indices: provides a transparent view of the fixed income market.
By monitoring and adapting to industry changes, Markit ensures
its products align with customers’ business and regulatory needs.
This consists of bonds, CDs and securitised products.
- Securities Finance: provides global securities financing data to
help customers manage securities lending programmes, manage
collateral, optimise trading performance and enhance
investment decision making. The dataset covers more than $15
trillion of global securities in the lending programmes of over
20,000 institutional funds. It includes more than 3 million
intraday transactions dating back 10 years.
- DeltaOne ETP Data: delivers the investment management
community a comprehensive technology-enabled service,
delivering high quality, timely and accurate Global Index and ETF
composition data, across all asset classes, customized for client
use, 24 hours a day.
Further review of the data reveals that Markit Reference Data delivers deep terms and conditions data and new issue information for over 4 million global government, sovereign, agency, corporate and over 3.5 million municipal bonds. Some of the key benefits of this product are depth of data, efficiency, data integrity and distribution. In addition, "the partnership with Euroclear gives participants access to more than 200,000 Eurobonds, cross-referenced against Markit’s entity database and industry sector identifiers."
The Markit MCDX index is a credit index referencing 50 municipal single name CDS and debt issues in addition to 250 minimum amount of outstanding debt for a reference obligation. Its customers are banks, asset managers, hedge funds, insurance companies and corporate treasurers. The index includes the following primary characteristics: "reference entities, reference obligations, ratings, credit events, recovery rate assumptions for upfront and unwind calculation, roll dates, tenor and quotation standard." Some of the benefits of this product are trading efficiency, liquidity, transparency and data integrity.
The MCDX is a significant evolution in the municipal bond market. It will allow traditional municipal bond investors to hedge their cash positions, and new entrants to the market to generate increased liquidity. Markit explains that "The index was designed by leading market participants, and is expected to grow in importance in the muni universe, as credit analysis becomes more prevalent even in investment grade muni investing."
This published customer update is regarding the 2016 Muni HQLA rulemaking. It reports that"on July 1st certain municipal securities will qualify as HQLA under the Federal Reserve Board’s recent rules amending the 2014 liquidity coverage ratio (LCR) rulemaking." The Muni HQLA rulemaking is a limited concession to those that criticised the LCR rulemaking’s treatment of munis. According to the article, "critics include municipalities and key constituents of the financial services industry." It is reported that the Federal Reserve Board decided to make a more limited allowance: allowing certain munis to receive, less favourable, level 2B HQLA status. This is in spite of the opposition.
IHS MARKIT RESEARCH STUDY
IHS Markit reviewed trade and quote activity on approximately 570,000 unique municipal bonds from January 2015 through March 2016. The study surveyed the overall quote/trade depth and diversity during that period, focusing mainly on unique bonds during various periods of time.
The analysis concluded that the market was relatively efficient and municipal bond liquidity was stable during the period. However, liquidity tapered off at intermittent periods due to seasonal factors. Here are some of the findings:
- 483,647 unique bonds traded and 253,194 were quoted in 2015,
with approximately 50% of those appearing in the first four
months of the year. Almost 99% of the quoted bonds traded at
least once, with approximately 2,800 never trading during the
- Data indicates that increasing the depth from one to four
dealers increases the probability of a revenue bond trading from
19% to 66%, based on 2015 data.
- New York general purpose and public improvement bonds had
the highest likelihood of trading (25%) in 2015 among the 15
most quoted and traded use of proceeds and state
combinations revenue bonds that were only quoted once on a
- There were 250 trading days in 2015 and not a single municipal
bond traded every day.
- Approximately 9,900 bonds traded at least 10 days in 2015.
However, there were only 316 bonds that were quoted at least
10 days that never traded during the year.
To wrap it up, the data revealed that the additional products that IHS Markit provide are: reference data, indices, security finance and DeltaOne ETP data. An IHS Markit Research Study was conducted and a customer update was published.
Thank you for using Wonder. Please let us know if we can help with anything else.