BLOG — Aug 31, 2021
Municipal Calendar Week of 08/30/2021
By Matthew Gerstenfeld
Calendar Week of 08/30/2021
Muni supply is positioned to ease heading into the holiday weekend as summer redemptions throttle down and participants prepare for the fall season which has historically drawn greater supply figures. Muni benchmarks displayed nominal movement over the course of last week, widening by 1-2bps as participants awaited further guidance on economic activity and government market policy updates. New issue activity was partially subdued ahead of Jerome Powell's speech last Friday, as market players analyzed key insights behind impending monetary policy announcements. Throughout the course of the speech, Fed Chair Powell supported a laissez-faire approach to tightening monetary policy, after affirming current inflation levels should be deemed temporary and would subside as labor and market conditions improve. Nonetheless, Powell noted a cautious approach behind any interest rate increases to avoid any unforeseen economic repercussions which may delay the eventual return of pre-pandemic national employment levels. As part of the outlook, Powell alluded to near term tapering of central bank asset repurchases, spanning mortgage backed securities and US treasuries which have hovered ~$120Bn per month in effort to foster healthy economic expansion. Evolving pandemic conditions have contributed to careful consideration of potential federal policy adjustments, as timelines for such decisions remain heavily dependent on risks associated with the delta variant, a potential inhibitor of job creation and lingering inflation. As the nation vigorously battles pandemic-induced setbacks, state and local governments continue to navigate COVID-19 case fluctuations, marking a challenging return to a pre-covid operating environment.
Primary activity remains stable as participants step away for summer vacations after last week's calendar supplied $9.8Bn of muni paper after several large issuers stepped up to the plate and priced new issue bonds. The Pennsylvania Turnpike Commission led last week's primary calendar with a successful pricing of $530mm oil franchise revenue bonds with tighter spreads noted in the intermediate range of the scale, after 2031 maturity spreads landed +19 off the interpolated MAC. The South Carolina Public Service Authority also took advantage of opportunistic pricing levels, selling $430mm tax-exempt revenue bonds with bumps of 2-9 basis points registered across the scale. This week's calendar is slated to taper down to $6Bn ahead of the Labor Day Holiday weekend, with 167 new issues on the roster and noteworthy presence of New York offerings, representing ~25% of total issuance over the week. The New York Transitional Finance Authority (Aa1/AAA/AAA) is set to lead this week's negotiated calendar, offering $950mm future tax secured subordinate bonds spanning 08/2023-08/2048 with the greatest par size presented in the longer-dated maturities. New Hope Cultural Educational Facilities of Texas will also make a debut, selling $500mm senior living revenue bonds on Wednesday across three series, senior managed by Hilltop Securities. This week's competitive calendar will span 86 issues for a total of $1.64Bn, led by the New York Transitional Finance Authority, auctioning $250mm of future tax secured taxable subordinate bonds selling on Wednesday.
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This article was published by S&P Global Market Intelligence and not by S&P Global Ratings, which is a separately managed division of S&P Global.