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Weekly Muni Snapshot | 30 March 2020

Municipal New Issuance: Last week, saw roughly $2 billion in new issuances as many issuers continue to put their issues on hold until market conditions improve as well as the coronavirus pandemic gets under control. This is an increase from the week prior of $719 million. The deals last week included a private placement of $338 million New York State Urban Development Corp, and a $450 million University of Washington in Saint Louis.


Municipal Secondary Trading: Trading last week was down compared to the previous week as many investors did their selling due to the record number of outflows.  According to MSRB, about 57% of trades went to investors as confidence gained as the federal government passed the virus relief bill. Institutional investors offered bonds via bids-wanted were down last week as investors only offered $10.3 billion for sale compared to $13.9 billion the prior period. This is due to many investors gaining more confidence in the markets as well as the municipals outflows slowed.  We should start to see more buyers in the market as confidence in the market comes back, on a relative value basis municipal bonds are still considered cheap towards treasuries.

Municipal Spreads:  Markets last week bounced back from a rocky 2 weeks as last week saw the biggest weekly gain since 1982. This performance is a dramatic reversal from the massive sell-off we saw at the beginning of the month.  As of Thursday, we have a 7.3% gain for the week, a complete turnaround from the week before of a loss of 6.6% according to the Bloomberg Barclays index.  This sudden turnaround is due to the expectation of the US Government passing the $2 Trillion Coronavirus Relief Bill which will allow the Federal Reserve to purchase municipal debt. We are also seeing a lot of cross-over buyers come back to municipal market as they continue to seek more yield.

Spreads last week improved as confidence in the municipal market continues to grow due to Congress stimulus package. The 10-year are now yielding 206.48% compared to 339.62% the previous week 10-year yields fell roughly 95 basis points the 1.50.

Municipal Supply: This week is expected to see $2.39 billion in issuance as states and local governments are slowly start to price their debt as market is starting to rebound from the sharp sell-off we had earlier this month. Currently on tap for this week we should see a $330 million from the Research Foundation of State University of New York.