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Weekly Muni Snapshot | August 9, 2021

Municipal New Issuance: The negotiated calendar for the first week of August saw larger than average issuance for 2021. AmeriVet played a large role in this week as we participated in 3 deals including one as a senior co-manager. Those issues included the largest deal of the week which was the $932 million New York City Transitional Finance Authority, the $166 million South Carolina State Housing Finance Development Authority revenue bonds financing and AmeriVet served as a senior co-manager on the $108 million California State Department of Veterans Affairs which issued taxable revenue bonds. This was the second time AmeriVet has participated as a senior co-manager on one of their deals.


Municipal Secondary Trading: Secondary trading for the week totaled approximately $19.8 billion in volume for the week down from the prior week where we saw around $20.4 billion in bonds trading. As we move into the later part, we expect to see secondary trading to be even lighter than the weekly trading volume for 2021 which is fairly typical for this time of year. According to Bloomberg, customers put up roughly $2.13 billion up for the bid which Is down slightly from the prior week where customer bids-wanted were $2.26 billion.

Municipal Spread: After a week of modest price movement in the municipal bond market, yields rose in sympathy with rising treasury rates. For the week with the Bloomberg 10-year benchmark rose by 3.8 basis point to 0.875%. With the increase in yields this week, municipal bonds did underperform Treasuries as 10-year ratios are now currently yielding 68.47% compared to 66.61% a week ago but remain virtually unchanged from a month ago when the ratios were at 68.79%. We did see a slight steepening of the curve as the municipal bond curve is now at 137 basis points, an increase of just 0.5 basis points for the week.

For the 22nd straight week investors have added to municipal bond mutual funds as investors continue to put new cash to work as potential tax increases are looming and seem to be gaining more traction as the Senate plans on voting on the infrastructure plan. According to Refinitiv Lipper US Fund Flows Data, investors added $1.23 billion to municipal bond mutual funds with high-yield funds adding $492 million as many investors are looking to lower rated credits to find additional yield.

Since Spring 2020 the municipal markets have benefited from trillions of dollars of federal stimulus so with so much cash in the markets credit spreads have dramatically tightened and now have very little room for further compression. Currently the Options-adjusted spreads (OAS) for Bloomberg Barclays Municipal Bond Index are at the lowest in almost a year and over the past decade. This has pushed index spreads to below the historical average of 72 basis points to a point where the impact of the pandemic have completely reversed for municipal bond yields.

Municipal Supply: For the second week of August, the negotiated calendar will have an expected volume just over $5.9 billion down from the prior week of $7.5 billion. The largest and most notable deal for the week will the be $833 million Allegheny County Airport Authority for the Pittsburg International Airport, which will be issuing revenue bonds that will include AMT and Non- AMT bonds. The Triborough Bridge and Tunnel Authority will be issuing $450 million in payroll mobility tax senior bonds for their MTA bridges and Tunnels which AmeriVet will be in the syndicate. They New York City Housing Development Corporation will be issuing $310 million in sustainability development bonds which AmeriVet will also be in the syndicate.