IShares Muni Bond ETF hits 10-month high amid strong tax-free demand

CHICAGO, Jan 25 (Reuters) - The iShares National Muni Bond exchange-traded fund (ETF) rose on Monday to its highest level since March 2020 as heavy demand for tax-free debt sold by U.S. states, cities, schools and other issuers outstrips sluggish supply.

The largest muni ETF eclipsed its August high to close up 0.21% at 117.34 on Monday. The last time it was at this level was March 9, when it reached 118.15 in intraday trading before plunging as low as 100.03 on March 19 as fears of the economic fallout from the burgeoning coronavirus pandemic caused a selling frenzy in the municipal bond market.

The muni market stabilized after the Federal Reserve stepped in with emergency measures to backstop the market.

"The demand to buy muni bonds is absolutely swamping the supply of them," said Matt Fabian, a partner at Municipal Market Analytics.

The need by investors to reinvest cash from principal and interest payments on existing bonds, a likely rise in taxes, and expectations that the ongoing pandemic will depress debt issuance for new projects are fueling demand for tax-exempt munis and muni ETFs, he said.

https://finance.yahoo.com/news/ishares-muni-bond-etf-hits-215441531.html