Weekly Muni Snapshot | 7 December 2020

Municipal New Issuance: The first week on December negotiated calendar had roughly $8.2 billion in issuance with the largest deal being the $1.5 billion New Jersey Transportation Trust Fund Authority which has seen its bonds trading higher once they were free to trade. More limited market supply indicates that the lack of supply in recent months has helped to drive up bond prices in the secondary. AmeriVet was a participant in a few deals this past week including the $ 763 million New York City Municipal Finance Authority, as well as both New York State Housing finance Authority issues of $194 million and $95 million.

Municipal Secondary Trading: As expected, trading volume did pick up this week with majority of the buying being from institutional clients. Trading volume for the week totaled approximately $32.7 billion up from the prior week of $22 billion. According to Bloomberg client bids-wanted totaled around $3.13 billion for the week which is about a billion more than the recent weekly average as many clients worked more bonds via bids-wanted this week rather than attempt to sell the prior week because of the Thanksgiving holiday.

Municipal Spread: Municipal bond yields remained relatively unchanged for the week. The Bloomberg 10-year benchmark for the week fell only slightly this week by .5 points to 0.72% while the Bloomberg 30-year benchmark remained at 1.50%. which left the municipal curve the same as last week at 135 basis points, a month ago it was 158 basis points but far from what we had back in the beginning of March which was 94 basis points. With the rise in Treasury rates, municipal bonds also continue to outperform Treasuries as they are now 73.84% of Treasuries, a month ago they were 112.16% and at the height of the pandemic in March municipal bonds were almost 300% of treasuries.

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One sector that has seen improved execution and pricing performance in recent weeks are airline-backed municipal bonds. With the anticipation of widespread distribution of the coronavirus vaccines coming in the next few months airport bonds have rallied as many are expecting to see travelers return to the skies. High yielding airport bonds rallied roughly 5% in November marking the largest gains since 2009 and the best performing sector amongst the high-yield municipal markets.

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