Placement Ratio

"Placement" = the selling of a security, i.e. placing it with a cash buyer.

The municipal bond market is wide and diverse. There are a lot of local governments out there trying to raise money by selling debt securities. Lots of fire stations to be built, potholes to be filled, parks to be planted, and Ms. Plum Blossom sashes to be sewn.

Because of its size and complexity, getting a read on the overall muni market can be challenging. The placement ratio provides one potential measure of overall market situation.

The figure is calculated by dividing the amount of newly issued bonds that were sold during a period of time (usually, the ratio is looking at a week) by the amount of newly issued bonds that came to market. The figures involved are given as a dollar amount. So if $2 billion came to market and $1 billion of those got sold, the placement ratio would be 50%.

That shows how well the market is absorbing new debt issues. A small number points to a lack of demand for muni bonds. Bad news for Ms. Plum Blossom.