Recent Research in Public Finance: Predicting Municipal Bond Interest Rates

Bill Simonsen

Municipal Finance Journal, 2003, vol. 24, issue 2, 73 - 77

Abstract: This paper discusses the value of regression analysis in predicting municipal bond interest rates and argues for the use of an overall interest rate measure for municipal bond pricing. It points out that debt structures interact and, although each maturity is important, even more important is the overall effect on true interest cost (TIC). Regression prediction models can be developed that accurately predict interest rates, and these predictions can be of particular use in budgeting future debt service, in evaluating strategy and individual bond issues, and in negotiating sales.The starting point for negotiated sales should be the result that would be predicted if the sale were competitively bid.

Date: 2003
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