BLOG — Oct 18, 2021
Municipal Calendar Week of 10/18/2021
By Matthew Gerstenfeld
Calendar Week of 10/18/2021
New issuance volume is slated to pick up steam following last week's Columbus Day Holiday reduced calendar, heading back above the double digit levels witnessed in recent months as state and local governments finance new projects. Muni benchmarks remained relatively unchanged over the course of last week with bumps of 1bp noted on the short and long end of the curve with no movement across the belly, attributed to last week's lower trading volumes coupled with recently released reports surrounding economic indicators and developments flowing from Washington. Participants continue to direct attention towards inflation levels following the Federal Reserve's latest report showcasing record level PCE figures which have rebounded to levels witnessed during the beginning of the 1990's. While the Federal Reserve had originally indicated inflation levels would be deemed transitory, the timing of federal asset repurchase tapering in conjunction with climbing inflation has drawn greater questions from the market as the nation strives to curb pandemic-induced setbacks. As bipartisan discussion surrounding the Build Back Better plan remain paused, attention directed towards the upcoming infrastructure package has mounted as the market evaluates potential benefits associated with additional federal funding appropriated towards state and local governments. Ongoing economic and political-induced volatility surrounding interest rates has begun to garner the attention of issuers seeking to draw down debt service costs, potentially fueling higher volumes as state and local governments take advantage of opportunistic borrowing levels prior to the new year. As the market heads further into the fall season, participants forecast sustained issuance through mid-December as issuers address new money transactions while capturing robust buyside interest spread across various issue types and credits.
Demand for new issue paper remains strong after last week's holiday-shortened calendar supplied $9.5Bn, led by the Empire State Development which sold a combined $2.4Bn across six tranches which was well received by competitive bidders. Rising rates continue to play a factor in new issue spreads, after the Texas Water Development Board (-/AAA/AAA/-) issued $387mm of state revolving fund revenue bonds which priced tighter to the scale after the 2031 maturity fell +15bps off the interpolated MAC curve. The National Finance Authority of New Hampshire also tapped into the negotiated space last week, selling $346mm of federal lease revenue bonds in a single 04/2032 duration, offering yield-focused investors a return of 3.30% or +173bps off the 10YR UST. This week's calendar is positioned to climb higher to double digit levels of $11.8Bn, represented by 279 new issue offerings and a hefty presence of ESG offerings, representing an aggregate of $3.1Bn across various labels. The Central Puget Sound Regional Transit Authority, WA (Aa1/AAA/-) will lead this week's negotiated calendar supplying $875Bn of sales tax and motor vehicle tax improvement refunding bonds across maturities 11/2022-11/2050, carrying a green bond designation status and senior managed by JP Morgan. The Hudson Yards Infrastructure Corporation will also tap into the negotiated market on Wednesday 10/20 to finance $452mm of revenue bonds with a green bond designation status on behalf of Kestrel Verifiers. This week's competitive calendar will span 167 new issues for a combined total of $2.24Bn, driven by the North Texas Municipal Water District auctioning $202mm of water system revenue refunding bonds across 09/2022-09/2032, selling on Monday 10/18.
Negotiated ESG Offerings Week of 10/18/2021:
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