Municipal New Issuance: The final full week of September had roughly $10.8 billion in new issuance coming from via negotiated offering. The largest deals for the week were the 2-part $963 million Chicago O’Hare international Airport taxable and tax-exempt revenue bonds, the $811 million Yankee Stadium Project revenue bonds via New York City Development Agency followed by the $628 million Texas Development Board. The Virgin Islands was tapped to issue $1 billion but was delayed due to a pending lawsuit filed by the Superior Court of the Virgin Islands. AmeriVet was also part of three syndicates, the $650 million New York City Water Finance Authority, the $161 million New York State Housing Finance Authority and the $125 million Florida Housing Corporation.

Municipal Secondary Trading: Secondary trading for the week totaled around $27.9 billion according to MSRB down from the week prior of $39 billion. There was a slight increase in bids-wanted to $3.02 billion from customers, which was up from the week prior or $2.7 billion.

Municipal Spread: Although, yields remained relatively unchanged for the week only falling 0.1 basis points on the short end and falling by only 0.3 basis points on the long end. Yields lagged treasuries for the week as they are now yielding 124.58% compared to 117.41% a week ago, due to the rally we had in treasuries this week. The municipal yield curve steepened slightly as the Bloomberg 2-year and 10-year benchmark yields only fell by 0.1 basis points while the 30-year benchmark increased by 0.3 basis points increasing the gap to 148 basis points.

According to Refinitive Lipper US Fund Flows data investors added about $499 million to municipal bond funds marking the 20^th straight week of inflows totaling for the year of $17.8 billion coming into municipal funds year to date which paints a far better picture than we had back in March when we saw record number of outflows due to the Coronavirus pandemic putting fear into the municipal markets.

The one thing that has been talk about the most this year is where can we find the most yield? This has plagued many portfolio managers this year more importantly the investment-grade managers that they have gravitated towards taxable municipal bonds as well as high yield municipal bonds to gain the higher returns they need. Right now, you can earn almost two additional percentage points by looking at long high yield municipal bonds which is double what they can return by purchasing high-grade investment bonds. Currently, if you purchase an uninsured AAA taxable municipal bond maturing in 30 years you are yielding around 2.5% to receive that type of yield you would need to purchase bonds maturing in 12 years and be BBB- rated.

Municipal Supply. As we close out the month of September the Negotiated calendar for this week will total to around $9.6 billion. The largest deals for the week will be the $758.4 million North Texas Tollway Authority System taxable and tax-exempt revenue refunding bonds. San Francisco City & County Public utilities will be offering $599.8 million in taxable bonds, and the State of Louisiana will be issuing $434 million in refunding bonds. One interesting note is that 35% of the calendar will include taxable municipals.