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NEW YORK, Sept 18 (Reuters) - Some long-term U.S. municipal bonds now yield 14 percent more than a widely used benchmark, the London interbank offered rate, as the market on Thursday struggled to cope with hundreds of millions of dollars of sales, a muni analyst and two fund managers said.
The yield on a 25-year tax-free bond with a top-notch credit rating is even higher than in February, when such yields topped Libor by 10 percent during one of the $2.6 trillion muni market's worst-ever monthly performances.
"The market is in complete disarray," one of the money managers said.
Just two sellers were trying to unload $700 million of bonds as their short-term financing costs skyrocket: an insurance company offered a $500 million list and another player had an approximately $200 million roster.
One expert said the lists of bonds for sale could be in the billions of dollars.
Variable rate demand notes whose interest rates reset every day now yield from 7 to 8 percent, an uncommonly high level.
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