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Weekly Muni Snapshot | 27 January 2020

Municipal New Issuance: Last week saw U.S state and local governments issue more than $5.5 billion of bonds, with the most notable being the $370 million JobsOhio beverage systems, and the $346 million Connecticut Health and Educational Facilities Authority. New Issues have continued to be oversubscribed and repriced and bringing yields even lower.


According to YTDMTXBB Index, taxable municipals has reached $4.02 billion or roughly 30% of the total muni issuance in 2020, not including the $3.5 billion in taxable municipals with a corporate cusip.

Municipal Secondary Trading: With a holiday shortened week, municipal trading  saw roughly $22.2 billion in trading down from $42.5 billion from a week prior.


According the Bloomberg Barclays Taxable Municipal Bond Index taxable municipals have returned an 1.94% so far in 2020, the most since 2014, showing that investors are starting to favor taxable municipals rather than tax-exempt municipals which have only returned 1.48% for 2020

Municipal Spreads:  For the first time in a while Municipal Bonds lagged treasuries as 10-year municipals are yielding 74.39% of treasures compared to 72.119% a week ago.  The 2 year – 30 year curve steepened slightly by 0.1 bps this past week to 111 bps.


According to Bloomberg data 10- year taxable municipals appear to be cheap vs AA corporates of the same tenor and are seemingly even cheaper vs A rated corporate bonds. This could change as we see yields fall in corporates and investors will look to diversify into taxable municipals.

Municipal Supply: This week will see State and local governments to sell $5.77 billion, with the largest deals being the $589.4 million Baptist Health Care, $475 milllion NYU Langone Hospital, and a $456.8 million Ohio Turnpike.


Taxable issuance is expected to continue as we will see another $3.6 billion or 20% of projected supply in the next 30 days.  The volume of taxable municipals is the most in a decade, since Build America Bond issuance in 2010.


The state of Texas will have the most debt coming due with $4.4 billion coming in the next 30 days, followed by New York with $3.45 billion with  $1.2 billion coming from New York State Thruway Authority.