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Weekly Muni Snapshot | 6 July 2020

Municipal New Issuance: With a holiday shortened week the municipal market saw only about $5.5 billion in new issues. We were expected to see roughly $7 billion of new issues but many of the U.S states and local Governments decided to post-pone their issuance a week.  We were expected to see the City of Los Angeles, California $1.2 billion note deal but was pushed back a week.  The largest deal of the week was the Port Authority of New York and New Jersey $1.1 billion taxable notes deal. The deal was well received in the market as it was repriced with a 1.086% coupon.

Municipal Secondary Trading: With a holiday shortened week we saw very little in secondary trading as we only saw $20.2 billion on trades, compared to $36 billion the week prior. We also saw a drop in bids-wanted as we saw only $1.1 billion in compared to $2.47 billion, we saw the week prior.  As traders return from the holiday weekend, we should expect trading as well as the bids- wanted to return back to their normal levels.

Municipal Spreads: Municipal yields for the second straight week remained relatively flat as traders took the week off for the July 4th holiday.  The 10-year notes rose slightly by 0.3 bps to 0.858% keeping the yield curve the same as the long end was unchanged for the week. With the municipal market remaining unchanged for the week, they did lag treasuries as they are now yielding 128.06% of treasuries compared to 124.636% a week ago as they under-performed for the second straight week. Despite this under-performance verse treasuries, they still have been able to return about 2% year-to-date, still down from the highs of 3.11% in February, just before the Coronavirus pandemic hit the world and up from -2.52% at the beginning of April once the Federal Reserve announce they will start to purchase municipals.  In June we did see gains as the municipal market returned around 0.8%.

According to Investment Company Institute data for the eighth straight week we saw investors add to municipal bond mutual funds as we saw $2.61 billion added an increase from $2.43 a week ago. This was a record two week increase on record. For the sixth straight we also saw high yield funds an increase of inflows totaling $2.6 billion for the year, as many are still looking for yield which has also driven up prices and those high yield bonds have regained about 68% of their March losses.


With many investors continue to look for many have turned to the high-yield market, the one big bright spot in that market has been tobacco bonds as they have returned around 5% of, they year with most coming in June. One bond that stands out were the Ohio Buckeye 5% due in 2055 these bonds were issued in February at 108 cents and immediately traded as high as 116 cents but then dropped to as low as 70 cents on the dollar as the Coronavirus pandemic started, but has slowly crawled back to 105 cents.

Municipal Supply:  For the first full week of July we are expected to see U.S states and local governments to issue about $7.5 billion of bonds and notes. The largest deals of the week will be the $2.3 billion Regents of the University of California Revenue bond deal which will be a multi part deal with taxable and tax-exempt pieces. The City of Los Angeles will also be doing a $1.7.8 billion note deal that was pushed back one week and upsized from $1.2 billion.