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Weekly Muni Snapshot | 13 January 2020

Municipal New Issuance: The first full week saw U.S and local governments selling more than $8 billion in bonds. The most coming from the Metropolitan Transportation Authority (MTA) selling $939.6 million competitively as well as the $650 million University of Massachusetts Building Authority split between taxable and tax-exempt bonds.


The MTA competitive deal was done in 3 parts which were won by Bank of America, Citigroup, Morgan Stanley and JP Morgan with an average spread of +60 towards MMD.


The UMass Deal, which AmeriVet Securities was a Co-manager on, was originally slated to be $570 million, but with the increase in demand for taxable bonds it was increased to $650 million with spreads tightening by only ~2bps on the taxable portion.


For the first time in three years New Jersey auctioned off $325 million in general-obligation debt. The deal was won by Morgan Stanley who had bid aggressively, paying a yield of 2.07% for bonds maturing in 20 years or 27 basis points higher than top-rated debt.


Municipal Secondary Trading:  Trading volume picked up this week as we saw $37 billion in trades an increase from the holiday shortened week. 54% of all secondary trades came from dealers selling to investors with ~$15 billion in buyers compared to ~$13 billion in sellers.

Municipal Spreads:   Yields continued to tighten as the 10-year benchmark fell 3.9 bps this week to 1.36% compared to 1.40% last week.  10-year yields have continued their out-performance against treasuries as they are now yielding 74.89% versus 78.37% last week.

Municipal Supply:  This week will see a slight decrease in new issuance as State and Local governments are set to sell more than $7.04 billion in bonds next week with the Sales Tax Securitization Corp leading the way with $912 million in bonds, followed by the New Hampshire Business Finance Authority with $454.9 million. As well as the City of Chicago scheduled to sell $346.9 million.


The States with the most debt coming do are New York with $2.57 billion with New York State Thruway having $1.19 billion amount of securities maturing.  Minnesota has $1.24 billion maturing followed by California with $811 million maturing in the next 30 days.


With the 30-day supply being $13.5 billion and the 30-day redemption being $18.billion we should expect investors to be active in the secondary market as they look to reinvest their money.

On a final note, taxable munis have been roughly 30% of new issuance for the start of the new year. Taxable munis also saw an increase of 131% on a YoY basis. This increase is due to elimination of tax-exempt advance refundings, as well as the sizable decline in rates.  According to MuniOS, the visible supply for taxable will be $3.7 billion our roughly 18% of the new issue market.