Citigroup, UBS Exit Munis After Market's Profits Plummet by 50%.

CITIGROUP Inc.; UBS AG

Major Wall Street firms, including Citigroup Inc. and UBS Group AG, are exiting the municipal bond market due to a drop in underwriting markups that has impacted profits. Profits for municipal underwriters have fallen by 30% to 50% from 2005 to 2023, primarily due to a wider pool of institutional investors and improvements in disclosure that have compressed underwriting spreads. The departures of these firms raise concerns about the potential loss of financing options and increased borrowing costs for local governments. Despite political tensions, the pullbacks are likely profit-driven and unrelated to state policy. Smaller and regional firms are now looking to fill the gaps left by Citigroup and UBS. [Extracted from the article]

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