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Weekly Muni Snapshot | 24 February 2020

Municipal New Issuance: Last week, US State and local governments sold about $4.5 billion in new issuance via negotiated underwriting.  The most notable deal of the week was the district of Columbia which was priced by Barclays. The deal was well received in the primary market as it was increased from $961.5 million to $1 billion.


On the Competitive underwriting we saw the Commonwealth of Massachusetts do a $650 million three-part deal which was won by Bank of America and JP Morgan Bank of America won the $350 million and the 200 million, while JP Morgan won the $100 million portion. According to the state treasurer we saw aggressive bidding as the $350 million General Obligation saw a true interest cost of 2.759%. The $200 million GO bonds saw a TIC of 2.323% and the $100 million GO saw a TIC if 1.078.


New York State Thruway also did a competitive deal in two-parts, JP Morgan was awarded the $292 million portion while Bank of America won the $157 million portion.

Municipal Secondary Trading: Given that it was as a holiday shortened week, we saw roughly $26.3 billion in secondary trading, down from the week prior of $40 billion.


Institutional investors offered $2.1 billion for sale via bid wanted down from the previous week of $2.6 billion.

Municipal Spread: Despite Municipals continuing to lag Treasuries, yields have continued to fall as the 10-year notes fell 5.8 basis points to its all-time low of 1.11% this week. The 10-year ratio are now yielding 75.77% of treasuries compared to 75.80% a week ago and 72.12% verses a month ago.  The 2-yr-30yr curve slope continued to flatten to 96 basis points.

With yields continuing to fall investors will continue to pay up to purchase municipals as we saw an increase of $2.89 billion in mutual fund inflows in the week that ended February 12th and increase of $2.72 billion from the prior week.   This is an indication that investors are buying municipals regardless of the costs.  As we noted last week, we have seen international buyers having interest in municipals as they continue to look for more yield.


Municipal Supply: The final week of February we will see $14.2 billion in supply, with a $4.86 billion coming from a Buckeye Tobacco Settlement Financing authority deal, as well as a $738.6 million City of Los Angeles Department of Airport.


On the taxable municipal side, we will continue with trend and will see roughly $3.7 billion of supply. The most notable on the calendar are the $1.5 billion University of Cal Regents, $376 million West Virginia, $358 million NYU, and a $222 million Ohio State University.


New York has the most debt coming due in the next 30 days with New York State Urban Development Corp with the biggest amount coming due with $676.1 million. South Carolina also has just under $1 billion due in the next 30 days.