U.S. Markets closed

Morningstar to end muni credit research and commentary

By Robin Respaut and Jennifer Ablan

June 11 (Reuters) - Morningstar Inc announced on Wednesday that it would no longer provide municipal credit analyst research and commentary, citing a lack of demand.

The announcement is another hit to the municipal bond market, which has seen shrinking issuance, dwindling household ownership, and now, declining interest from investment research firms like Morningstar.

Morningstar began offering municipal analyst coverage in 2012. The Chicago-based firm said existing content will be available until the end of June, and it will continue to produce its daily, web-based bond detail reports.

A Morningstar spokeswoman said there are three employees on the municipal credit analyst team, including Jeff Westergaard, who will remain head of fixed-income data and analytics for the firm. The spokeswoman said the muni team members will be in place until the end of June and that Morningstar is "working with them" in other roles at Morningstar.

State and local governments have reduced bond sales, contributing to an overall market contraction. Outstanding municipal debt is now at the lowest level since 2009.

Households cut their municipal bond holdings at the fastest pace in more than a year in the first quarter. Households, essentially individual investors, now own 43.8 percent of the market, the smallest share in at least a decade.

(Reporting by Robin Respaut and Jennifer Ablan; Editing by Leslie Adler)