The largest exchange-traded fund tracking municipal bonds traded at a discount to its underlying assets for the first time since July as states and cities flooded the market with the most borrowing in six months.

The iShares S&P National AMT-Free Municipal Bond Fund traded 0.46 percent below its net asset value Dec. 14, data compiled by Bloomberg show. The last time the price dipped below that was July 16. The fund declined almost 2 percent to $111.05 last week. It was $110.92 per share at 10:35 a.m. in New York today, the lowest since Sept. 18.

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