Municipal New Issuance: Last week saw about $6.3 billion in new issuance with the bulk of coming from 3 deals. New York City Transitional Finance Authority, which AmeriVet Securities was in selling group, sold $850 million, State of Illinois sold $800 million and the State of Utah sold $447 million. The NYC TFA deal was originally set to sell only $700 million but the deal was up-sized as demand for the deal was high. The deal was also tightened across all the maturity showing that the deal was attractively priced.  The State of Illinois which was also up-sized from $750 million to $800 million had to use a yield of 5.6% on the 2025 maturity to garnish any interest. On the other hand, the State of Utah which has the highest rating was able to sell bonds that were under the benchmark yield in the same maturity. Showing us that investors are favoring better quality bonds even more now.

Municipal Secondary Trading: For the second week of trading for May we saw about $34.9 billion in secondary trading down from the week prior of $48.3 billion, as once again most continued to focus on the news issues for the week as they have been priced at attractive levels.  According to Bloomberg, Institutional investors offered up $3.4 billion, down from a week prior of $4.6 billion as most investors were buyers for the week. We should expect bid wanted to be down again this week as we head into a holiday week.

Municipal Spreads: Yields for the week improved as we saw the 10-year benchmark fell 15.9 basis points from the week prior to 1.029%. This improvement due to investors continuing to look for yield as they shifted about $585 million back into the $3.9 trillion municipal market.  The 10-year ratio this week also, improved as it is now 162.30% compared to 173.14% a week ago.

Although, we are seeing some improvements in the municipal market this can only be said about high-quality bonds as their yields are almost at their record lows, while lower-rated bonds have gone in reverse. For example, we just saw the State of Utah issue last week which is rated AAA is expected to be impacted by the shutdown to have a short fall of $1.3 billion next year, but also has about $884 million in reserves which will help soften the blow.  On the other side if you take a look at New Jersey which is one of the worst rated states is seeing its yield climb as they do not have as much in reserves.

Municipal Supply:  This week we should see about $5.8 billion in supply as more and more issuers are coming back to the market.  The most notable issuers for the week are the $850 million State of Connecticut, the $383.4 million Texas Water Development and the $243.2 million New Jersey Higher Education Student Assistance Authority.