Investors choosing to sell their securities rather than to hold them to maturity normally will sell through a municipal securities dealer that buys the securities and sells them either to another investor or back into the secondary market. Many factors can affect the market value of a municipal security and the price received in such a sale. These include changes in general interest rates that have occurred since initial issuance, changes in the credit quality of the security, current market conditions with respect to the specific type of municipal securities involved and other factors.
Purchasers of municipal securities tend to be "buy-and-hold" investors and the vast majority of fixed-rate municipal bonds and notes are not traded on a regular basis after the trading that occurs when they are new issues. Approximately 1.3 million different municipal securities are outstanding in the market at any given time and so a significant amount of secondary market trading does occur. However, the chances of a specific bond being available in the secondary market at any given time are relatively small.
It is typical for investors seeking to purchase municipal securities in the secondary market to identify the basic characteristics of security which is desired (e.g., state, credit worthiness, maturity range, interest rate or yield, market sector, etc.) and then to choose from among the municipal securities available for purchase at that time meeting those criteria.
Information about the prices at which municipal securities trade in the secondary market is available on a real-time basis, through the MSRB’s free Electronic Municipal Market Access (EMMA) website. EMMA also has historical trade price information dating back to January 1, 2005.
Read more about transaction prices.