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Weekly Muni Snapshot | November 8, 2021

November 8, 2021

Municipal New Issuance: The negotiated calendar for the first week of November totaled to just over $5.6 billion with a third of the issuances coming from just three deals. The largest deal of the week which also gained the most attention was the $832 million State of Texas taxable general obligation and refunding bonds. AmeriVet was a co-manager on the second largest deal which was the State Public Works Board $562 million green bonds. Los Angeles Department of Water also came to the market by issuing $401 million in tax-exempt bonds.

Municipal Secondary Trading: Secondary trading for the week totaled to just over $28.2 billion with 56% of tall secondary trades were clients buying. Secondary trading continues to be on the light but has been trending upwards with yields have been slowly trending upwards. According to Bloomberg clients put up $2.65 billion bonds up for the bid down from the prior week of $3.14 billion.

Municipal Spread: Municipal bonds rallied for the week with the yields on the 10-year benchmark falling by 8.5 basis points to 1.13%. 10-year bonds have increased by 50 basis points this year. With the rally municipal bonds did outperform Treasuries as ratios for state and local debt maturing in 10 years are not yielding 78.23% compared to 78.42% a week prior but remain slightly higher from 1 month ago of 74.52%. With yields dropping across the municipal bond curve, we did see the curve flatten for the week by 11 basis points to 143 basis points.

Municipal bond funds continue to see investors add to their funds as investors added roughly $603 million to their funds marking the 35th straight week of weekly gains according to Refinitiv Lipper US Fund Flows data. This weekly gain follows the previous weeks inflow of $397 million. High yield funds saw its smallest weekly gain of just $1 million for the week while long-term funds added about $569 million. As of Oct 27th, investors have added $77.5 billion to municipal funds year-to-date. Many investors are still motivated by tax-avoidance and continue to pour money into municipal funds. If things continue to stay on track with investors the markets would need about $475 billion in supply to meet the current demand based on new municipal-fund flows and bondholder-reinvestment data.

With 2021 being an off-year election with not much was talked about beside the 2 gubernatorial elections in New Jersey and Virginia. Municipals bonds did have play a significant roll this year with about $27 billion of bonds were up for approval nationwide. Of the $27 billion (lowest since 2017) that was voted on, only $15 billion were passed with many decided by a slim margin. Many have been hesitant to approving new projects as they see it has will raise taxes.

Municipal Supply: The negotiated continues to be light due to Veteran’s Day holiday on Thursday November 11th we are expected to see a total of about $7.4 billion for the week. This largest issuer of the week will be the Dallas Area Rapid Transit will be issuing $1 billion with $578 million in refunding bonds and $428 million in tax-exempt bonds. The District of Columbia who will be issuing $654 million in tax-exempt bonds. AmeriVet will have a rather busy week this week as we will be in part of three issues. AmeriVet will be in the $500 million State of Connecticut Special Tax Obligation Bonds, as well as the $248 million State of New York Mortgage Agency as a selling group member. AmeriVet will be a Co-manager on the $253 million Pennsylvania Housing Finance Agency Revenue bonds.