Municipal New Issuance: For the final full week of the year U.S. state and local governments are set to sell $6.3 billion in negotiated deal with the bulk of new issuance coming from the $3.3 billion New York State Dormitory Authority ($2.0 billion Tax-exempt, $1.3 billion taxable)  The deal came with 4% and 5% coupons across all maturities with 3% coupons coming in the 2049 maturity. During the retail order period the 5 year bonds were priced with a spread of +9 of MMD, with 10 year bonds being priced at +18 or a yield of 1.56%. The lead underwriter removed the 2044 maturity and created a 4% 2046 maturity with bonds coming from the 2044 maturity as well as from 2041, 2048 and 2049 maturities.

 

For this holiday shortened week We will only see ~$40.5 million in new issuance. The Port of Greater Cincinnati Development Authority plans to sell $20.9 million, and the Upper Dublin School District has scheduled $10 million.

 

Municipal Secondary Trading:  In the past week institutional investors offered ~$3.8 billion for sale via bid-wanted a 7% increase from a week prior.  Institutional investors continue to be net buyers as we saw investors purchase ~$1.5 billion more bonds then they had sold. According to MSRB trading volume totaled $64.5 billion down from $65 billion a week ago.

 

Municipal Spreads:   Municipals continue to lead treasuries this week as 10 year municipals are now yielding 77.344% of treasuries, compared with 79.923% a week ago and 87.064% a month prior. 10-year benchmark yields rose slightly 0.8 basis points in the past week to 1.485%. Yields between short-term and long-term bonds continue to steepen to 1.087 an increase of 2.2 basis points.

Municipal Supply:  As we finish out the year 30-day visible supply continues to dwindle to $5.2 billion a decrease from $10.8 billion a week ago. With Christmas this week, the new issue calendar will only be ~$40.5 million.