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Weekly Muni Snapshot | 4 May 2020

Municipal New Issuance: We continue to see more state and local governments issue as we saw about $6.1 billion come to market with the largest deal being the $1.2 billion New York Power Authority taxable and tax-exempt deal, where AmeriVet was part of the selling group. The deal was up-sized from $1.1 billion to $1.2 billion due to overwhelming demand pre-sale. The deal was subsequently bumped 1-3 basis-points on the tax-exempt side and tighten from a spread of +175 to +160 versus treasuries on the taxable piece.

Municipal Secondary Trading: Trading for the week saw about $38.8 billion in secondary trading down from the week prior of $46.5 billion, as many investors were focused mainly on new issues.  According to Bloomberg, Institutional investors offered up $ 4.3 billion, down slightly from a week prior of $4.5 billion.

Municipal Spreads: The recovery we had this month was short lived as spreads slid once again for the week, as states and local governments continue their lockdown, along with Senate majority leader Mitch McConnell stating that states should go bankrupt rather than receive bailout. This surely would not happen as the Democrats led house will never pass such measures.  As the municipal markets retreated investors pulled $1.26 billion from mutual funds according to Refinitiv Lipper US Fund Flows.  This is a quite a reversal from the previous 2 weeks of inflows we had.  Most of the outflows came from high-yield funds which saw $790 million of outflows.