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AmeriVet Weekly Muni Snapshot

Municipal New Issuance: The negotiated calendar last week had a total volume of just over $16.5 billion with the two largest deals of the week being the $1.2 billion California Community Choice Financing Authority Clean Energy Project Revenue Bonds issuance and The Regents of the University of California transaction which featured $1 billion in tax-exempt bonds and $150 million in taxable bonds. The Harris County Hospital District issued $783 million while the Commonwealth of Kentucky issued $750 million. AmeriVet served as a Co-Manager on the $140 million Wisconsin Housing and Economic Development Authority Home Ownership Revenue Bonds transaction. Additionally, AmeriVet participated in the Selling-Group for the $398 million Tri County Metropolitan Transportation District of Oregon last week.

Municipal Secondary Trading: Secondary trading volume for the week totaled to just over $43.73 billion, with 53% of secondary trading being dealer sells. According to Bloomberg (MBWDPAR Index), clients put approximately $4.99 billion up for the bid, which is a modest increase from the prior week’s bids wanted total of $3.56 billion.

Municipal Spreads: Munis rallied this past week with yields falling by an average of 7 basis points across the curve with yields on 10-year notes falling by 4.9 basis points to end the week at 2.92%. With yields falling, munis were able to outperform Treasuries with the 10-year muni-to-Treasury ratio now yielding 64.46% compared to 67.05% from the prior week. We did see the muni curve flatten by 4.3 basis points this past week to end the week at 187 basis points.

Muni bond funds continued to see positive fund flows as muni bond funds saw investors add nearly $1.4 billion to muni bond funds this past week. This follows prior week’s inflow of $2.3 billion according to LSEG Lipper Global U.S. Funds Flows Data. This is the fifth week in a row in which we saw inflows of over $1 billion.

Munis are off to a great start for the month of June with yields falling across the curve, outperforming Treasuries for the first week of June. Muni returns for the first week of June saw returns of .39%, pushing returns higher for the year to 1.74%. We saw bumps of 4-5 basis points in the 2027-2036 maturities, in the 2037-2039 maturities we saw bumps of 5-6 basis points, and in the 2040-2056 we saw bumps of 9-10 basis points. This rally was fueled by robust demand as June reinvestment season as continue to see positive fund flows once again this past week. Muni-to-Treasury ratios remained attractive, particularly in the intermediate and long end, drawing continued investor interest. Credit fundamentals across the municipal market remained stable, supported by strong state and local government balance sheets.

Muni-to-Treasury ratios remained relatively stable during the first week of June as both municipal and Treasury yields moved lower. The 2-year ratio and 5-year ratio finished the week in the 57-58% range while the 10-year ratio was roughly in the 64% range, and the 30-year range ended the week at 85%. Munis continue to offer attractive relative value for investors in higher tax brackets. Intermediate and long maturities continued to garner the most attention, as ratios remained above historical averages despite the recent municipal rally

Municipal Supply: The negotiated calendar for the second week of June will have an expected volume of just over $9.95 billion, with the largest deal of the week being thee $983 million Commonwealth of Massachusetts GO and GO Refunding issuance which AmeriVet will be participating in the Selling-Group. The second largest deal of the week will be the $647 million North Carolina Medical Care Commission. The Los Angeles Community College District plans on issuing $568 million. The State of Illinois plans on issuing $463 million for Build Illinois Bonds. AmeriVet will be serving as a Co-Manager on the $102 million Massachusetts Housing Finance Agency Housing Bonds issuance.

Have a great week!