The placement ratio is a ratio that calculates the amount of bonds sold during the week as a percentage of the amount of municipal bonds that are issued during the corresponding week. Only issues of 10,000,000 par value or more are used in the calculation. Placement ratio is also known as the acceptance ratio. ﻿\begin{aligned} &\text{Placement Ratio} = \frac { \text{Municipal Bonds Sold}}{ \text{Municipal Bonds Available} } \\ \end{aligned}﻿ ## BREAKING DOWN Placement Ratio The placement ratio is used by investors as 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 that were sold in that week. In effect, the placement ratio is the dollar amount of new issues that have been placed with investors by underwriters, expressed as a percentage of the past week's new municipal bond offerings. The higher the placement ratio, the better off the municipal bond market is, as a high ratio indicates that the municipal bond market is sold and 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, assume100 million par value municipal bonds were issued last week. $70 million of this offering was sold by underwriting syndicates. The placement ratio is, therefore,$70 million / \$100 million x 100% = 70%. This ratio shows interested parties how well the market absorbed the bonds offered in the previous week.

The data for bonds sold and issued during the week is compiled and published weekly by the market newspaper, "The Bond Buyer". The Bond Buyer is a financial publication that covers the municipal bond market by tracking and reporting trends in this 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 (Moody's rating) or grade AA (Standard & Poor’s rating) and is used to determine the interest rates for a new issue of general obligation bonds.

The placement ratio is compiled every week at the close of business on Friday and is reported on Monday. The 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 that the placement ratio in the primary market rose from 70% to 93% in the past week, this suggests high demand relative to supply and also a favorable market for issuers to enter into.