I had a chat with Hugh D. McGuirk, head of T. Rowe Price’s municipal bond team and a member of their Fixed Income Steering Committee. Mr. McGuirk is also a portfolio manager for the US Municipal Long-Term Bond Strategy at T. Rowe Price. Here is the interview.

Q: Do you do credit analysis in house?

A: Hugh McGuirk: Yes. The T. Rowe Price municipal investment strategy is driven by rigorous, independent fundamental analysis.

Q: Are you finding adequate dealer liquidity when you need to make adjustments to portfolios or cover redemptions?

A: In the wake of the financial crisis and in the face of more stringent regulations, dealers have scaled back their inventories significantly. We believe this trend is one that is likely to persist. While this generally reduces liquidity across the municipal markets and can amplify volatility, particularly during sell offs, we are able to trade efficiently and effectively in the municipal market.

Q: Is shrinking municipal bond issuance a problem for you? Would it be if inflows got stronger?