
Placement Ratio
The placement ratio, also known as the acceptance ratio, calculates the percentage of new municipal bond offerings greater than $1 million purchased in the prior week. Placement Ratio \= Municipal Bonds Sold Municipal Bonds Available \\begin{aligned} &\\text{Placement Ratio} = \\frac { \\text{Municipal Bonds Sold}}{ \\text{Municipal Bonds Available} } \\\\ \\end{aligned} Placement Ratio\=Municipal Bonds AvailableMunicipal Bonds Sold The higher the placement ratio, the better the overall strength of the municipal bond market. The data for bonds issued and sold during the week is compiled at the close of business on Friday and reported on Monday by _The Bond Buyer_. The placement ratio is an indicator of the overall situation of the municipal bond market. The placement ratio, also known as the acceptance ratio, calculates the percentage of new municipal bond offerings greater than $1 million purchased in the prior week. The placement ratio, also known as the acceptance ratio, calculates the percentage of new municipal bond offerings greater than $1 million bought in the prior week.

What Is the Placement Ratio?
The placement ratio, also known as the acceptance ratio, calculates the percentage of new municipal bond offerings greater than $1 million purchased in the prior week.



Understanding the Placement Ratio
The placement ratio is an indicator of the overall situation of the municipal bond market. The ratio compares the number of newly issued bonds (competitive and negotiated) during a week to the number of bonds sold in that week. In effect, the placement ratio is the dollar amount of new issues that underwriters have placed with investors, expressed as a percentage of the past week's new municipal bond offerings.
Placement Ratio = Municipal Bonds Sold Municipal Bonds Available \begin{aligned} &\text{Placement Ratio} = \frac { \text{Municipal Bonds Sold}}{ \text{Municipal Bonds Available} } \\ \end{aligned} Placement Ratio=Municipal Bonds AvailableMunicipal Bonds Sold
The higher the placement ratio, the better the overall strength of the municipal bond market. A high ratio indicates there is a lot of interest from bond underwriters. Conversely, a low ratio points to a sluggish market and lack of interest from underwriters.
For example, assume $100 million par value municipal bonds were issued last week. Of this, $70 million was sold by underwriting syndicates. The placement ratio is $70 million ÷ $100 million x 100% = 70%. This ratio shows interested parties how well the market absorbed the bonds offered in the previous week.
Recording the Placement Ratio
The data for bonds sold and issued during the week is compiled and published weekly by The Bond Buyer, a financial publication that covers the municipal bond market. The newspaper publishes numerous indices, one of which is the Bond Buyer 20 Index. This index tracks the average yields of 20 general obligation municipal bonds, rated grade Aa2 by Moody's or grade AA by Standard & Poor’s, and is used to determine the interest rates for a new issue of general obligation bonds.
The Bond Buyer's placement ratio is compiled every week at the close of business on Friday and reported on Monday. It's also possible to access the publication's archive to view the placement ratio from previous weeks and determine long-term trends.
Special Considerations
The placement ratio is used as an indicator of where the bond market is headed. A sizable inventory of unsold bond issues in the primary market signals a depression in the secondary market. If The Bond Buyer states the placement ratio in the primary market rose from the previous reading, then this suggests high demand relative to supply and also a favorable market for issuers to enter into.
Related terms:
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Bond Buyer 20
Bond Buyer 20 is an index of a portfolio of 20 general obligation bonds that mature in 20 years whose value is derived on a survey of bond traders. read more
Bond : Understanding What a Bond Is
A bond is a fixed income investment in which an investor loans money to an entity (corporate or governmental) that borrows the funds for a defined period of time at a fixed interest rate. read more
Bond Market
The bond market is the collective name given to all trades and issues of debt securities. Learn more about corporate, government, and municipal bonds. read more
Debt Ratio
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Force Index
The force index is a technical indicator that uses price and volume to determine the power behind a price move and can identify potential turning points. read more
General Obligation (GO) Bond
A general obligation (GO) bond is backed by the credit and "taxing power" of the issuing jurisdiction rather than the revenue from a given project. read more
Municipal Bond
A municipal bond is a debt security issued by a state, municipality or county to finance its capital expenditures. read more