AmeriVet Weekly Muni Snapshot
Municipal New Issuance: Last week’s negotiated calendar totaled to $6.6 billion with the largest deals being the $1.2 billion Michigan State Trunk Line Revenue Bond issuance followed by the $1 billion New York City Transitional Finance Authority transaction which AmeriVet participated in the Selling-Group. In addition, AmeriVet participated as a Co-Manager on the $185 million Wisconsin Housing and Economic Development issuance and the $19.6 million New Hampshire Housing Finance Authority as a Selling-Group-Member. The New York City Transitional Finance Authority issue received large demand as their bonds repriced lowering the yields by 2 to 5 basis points. Municipal Secondary Trading: Trading for the week totaled to $37.3 billion with 55% of trades being dealer sells. According to Bloomberg, clients put up roughly $6.41 billion last week compared to $6.15 billion from the prior week. |
Municipal Spreads: Muni yields continued to rise this past week with 10-year notes rising by 7.8 basis points to 2.90%. With the rise in yields, munis underperformed compared to Treasuries as 10-year notes are now yielding 68.64% compared to when the ratios were at 66.42%. The muni curve did steepen by 2.7 basis points this past week to finish the week at 73 basis points. |
With munis continuing to be weaker, investors pulled about $534 million from municipal bond funds last week according to Refinitiv Lipper US Fund Flows. This outflow follows the prior week’s outflow of $264 million. With volatility in Treasuries continuing to put pressure on munis, investors are being pushed to the sidelines until yields settle down. |
With the underperformance in munis this past week, we did see the muni-Treasury ratio cheapen with the long end being impacted the most by 3 percentage points. The front end has improved slightly cheapening by 2 percentage points. Although we are seeing higher yields and cheaper bonds relative to Treasuries, investors are still not convinced that we have not seen the end of rising yields. |
Municipal Supply: The final week of August will have an expected volume of just $2.4 billion with the largest deal being the $665 million Main Street Natural Gas followed by $290 million City of Jacksonville Florida issue. AmeriVet will be participating on two issues next week as a Selling-Group-Member which will be the $100 million South Carolina State Housing Finance and Development Authority transaction and the $25 million Minnesota Housing Finance Agency issuance. |