Municipal New Issuance: Last week’s negotiated calendar had a total volume of just over $5.7 billion with the largest deal being the $840 million Virginia Small Business Finance Authority Revenue bonds for the I-495 Hot Lanes project. The second largest deal of the week was the $421 million Kentucky State Public Energy Authority Gas Supply adjustable-rate bonds. AmeriVet was in two issues last week which were the $180 million New York City Housing Development Corporation deal, as well as the $171 million State of New York Mortgage Agency Revenue Bonds. We did see a few deals be postponed as issuer’s felt that with things going on with Russia and Ukraine, as well as the volatility in the markets, they should take a step back until things settle down.

Municipal Secondary Trading: Secondary trading was very active this week with roughly $25.24 billion in secondary trades, which was down from the prior week of 35.3 billion mostly due to the Presidents Day holiday. According to Bloomberg, customer bids-wanted totaled to $4.48 billion as many investors rushed to find buyers amid the volatility in the markets brought on by the Russian Invasion of Ukraine. On Thursday, investors put up $1.8 billion for the bid, the most since Spring 2020. This was very peculiar as the fixed income markets rallied as many investors flocked to safer investments.

Municipal Spread: With geopolitical tensions in Europe rising, investors piled into fixed income products sending municipal yields lower for the week, with yields on 10-year municipal bonds falling by 4 basis points to 1.62% for the week. With this rally, municipal bonds were able to outperform Treasuries last week as 10-year ratios are now at 82.73% compared to a week ago of 86.17%. The yield curve continues to flatten as the gap between shot-term and long-term securities is now just 96 basis points.

Investors once again pulled cash out of municipal-bond mutual funds this week to the sum of $1.2 billion, this follows the prior week’s outflow of $1.3 billion and marling the fifth weekly outflow in the past six weeks. Municipal bonds funds have lost over $5.7 billion so far this year.

Municipal bonds had one of its biggest gains last week since late 2020 due to the geopolitical tensions in Europe with the Russian invasion of Ukraine and investors moving into haven assets. Municipal bond yields have fallen across the curve with yields dropping over 6 basis points last week, the biggest decline in yields since the outcome of the November 2020 presidential elections. We believe that we should continue to see this rally as municipal bonds tend to lag U.S Treasuries which have also rallied last week with 10-year Treasuries 5 basis points for the week. The advance in municipals have pared some of the 2022 losses municipals have taken which has been fueled by inflation and the anticipation of Fed rate hikes. Municipal bonds have lost an average 3% so far this year somewhat of an oddity to start the year as we usually see the market gain amid reinvestment demand is high.

Municipal Supply: This week’s negotiated calendar will have a projected volume of roughly $3.6 billion with many issuers have pushed their issuance to day-to-day as they assess the situation that is going on in Europe and wait until the volatility begins to subside. The largest deal of the week, which AmeriVet will be in the selling group, is the $792 million New York City Municipal Water Finance Authority Refunding issue. The second largest deal of the week will be the $500 million Massachusetts Institute of Technology taxable bonds which will be using a corporate cusip for the deal.