Markit launches municipal bond pricing service

Source: Markit

Markit, a leading, global financial information services company, today announced the launch of its new evaluated pricing service for municipal bonds.

The service draws on a range of observable market data to price 900,000 municipal bonds rated Aaa/AAA to Baa3/BBB-. Municipal bond pricing is the most recent addition to Markit's evaluated pricing platform which includes corporate and sovereign bonds.

To produce independent prices for municipal bonds, Markit aggregates market data from multiple sources. Bid-offer levels from quotes, transaction information from the Municipal Securities Rule Making Board (MSRB) and other market data feed directly into Markit's calibration engine and enable rapid updates of municipal bond prices. Markit has received numerous awards for the methodology, quality and independence of its pricing services.

Kevin Gould, President of Markit North America, said: "The muni market, like the corporate market, has experienced a dislocation between credit ratings and credit spreads. It is unrealistic to assume that a general obligation bond with similar ratings issued by different states should be priced in the same way. What Markit is doing is bringing a corporate credit mentality to the muni market and we have introduced a more granular calibration methodology to keep pace with the dynamic valuation patterns in this market."

Markit's evaluated pricing methodology for municipal bonds incorporates the financial condition of each state and municipality, uses of proceeds (62 in all) and other factors at the issue level to drive movements in price, regardless of the credit rating. As a result, Markit moves prices for specific CUSIPS for specific reasons, in contrast to the common practice of moving prices for multiple bonds in a credit rating basket at the same time.

Markit also offers clients metrics on the level of price point support and liquidity for each CUSIP and deal within which the CUSIP resides. Clients of Markit's pricing services also have access to specialist support teams that can assist with price challenges and other inquiries. 

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