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Weekly Muni Snapshot | 13 April 2020

Municipal New Issuance: With a holiday shortened week along with many issuers moving their deals to day-to-day or postponed, last week saw about $2.4 billion come to the market.  With the largest deal being the $472 million taxable Texas Public Finance Authority, which was sold by Citibank.

Municipal Secondary Trading: With a holiday shortened week, we did see a drop in trading as roughly $34 billion in secondary trades versus $58 billion the week prior.  Trading has slowly gone back to normal as many investors have had to sell last month due to outflows in their portfolios.  On Average we would usually see about $45-50 billion in secondary trades on a weekly basis. During the height of the outflows we saw about $150 billion in secondary trades.

Municipal Spreads: Municipals once again rallied as the federal reserve announced on Thursday, that it will lend around $500 billion to states and local governments to cover the massive tax losses brought upon the slowdown in the economy.  This was done so that there would not be a massive sell off of short-term debt like we had in March. The Fed also did not say whether or not if they will do the same with long-term debt as they are holding off on any more lending. Although, the lending program is only for states and about 10 large cities and 16 counties that meet the requirements, states will be allowed to borrow money for the smaller governments that do not fall under any of the population requirements.

Yields last week improved as the 10-year benchmark is now yielding 1.25 compared to 1.84 the week earlier showing signs that confidence is slowly coming back. We also saw the municipal market improve versus treasuries as the 10-year bonds are now yielding 174.06% versus treasuries, compared to 282.25% a week prior.

Municipal Supply: The calendar for this week is showing about $2.74 billion set to price, but this will most likely change as almost all the deals continue to be in a day to day status. The long-term calendar is showing that municipalities are planning to sell about $13.1 billion of bonds in the next 30 days, which will surely increase as many issuers will be waiting for the dust to settle.  Redemptions and maturities in the next 30 days totals $18.4 billion compared to $18.2 billion a week ago.