TY - JOUR T1 - Municipal Marketability JF - The Journal of Fixed Income SP - 86 LP - 95 DO - 10.3905/jfi.2004.439839 VL - 14 IS - 2 AU - Gwangheon Hong AU - Arthur D Warga Y1 - 2004/09/30 UR - https://pm-research.com/content/14/2/86.abstract N2 - A study of institutional- and retail-sized municipal bond transactions finds bid-ask spreads for retail-sized trades average well over 2% of price for both rated and non-rated issues, much higher than spreads for the institutional trades. Retail trade marketability measures suggest that municipal bonds have an implicit constraint of more than one month of non-marketability (time to transact at a given price), compared to under ten days for institutional-sized trades. The market is fairly well structured in terms of trading costs by bond rating. Lower-grade issues are costlier to transact in, with non-rated issues falling somewhere between Baa and high-yield. The major structural determinants of the bid-ask spread are volatility (time to maturity), trade volume, coupon, callability, and pre-refunded status. ER -