BLOG — Nov 08, 2021
Municipal Calendar Week of 11/08/2021
By Matthew Gerstenfeld
Calendar Week of 11/08/2021
Confidence across the municipal capital markets continues to expand following the most recent economic data released surrounding employment figures coupled with major developments from Washington. After months of deliberation, the US House of Representatives voted in favor of the $1 Trillion infrastructure bill, marking the largest allocation of federal funding to rehabilitate national infrastructure projects spanning roadways to new electric vehicle charging stations. The bill included various language to foster greater public/private partnership activities via private activity bonds in addition to ~$450Bn of outlined funding dedicated to roadways, bridges, power, airports, public transportation and more. While market participants welcomed the latest round of federal funding designated towards state and local governments, key muni bond provisions presented to the Speaker of the House, most notably the reinstatement of advanced refunding bonds (eliminated during the 2017 Tax Cuts and Jobs Act) were not included in the bill. The FOMC recently provided market players key guidance over the course of last week's two-day meeting confirming the tapering of asset repurchases set to begin this month after inflation figures surpassed levels originally forecasted. Fed Chair Jerome Powell also reiterated the potential for any rate hike in the foreseeable future is not in the cards, as the FOMC carefully evaluates fluctuations in labor market progression in addition to surging inflation data nationwide. All eyes remained on labor statistics following October's jobs report which posted a gain of +531k, pushing the unemployment rate down 20bps to 4.6%, outpacing market expectations while marking the lowest unemployment rate since the inception of the pandemic. Markets reacted positively to major headlines with equities climbing higher and US treasuries rallying given the jobs report outcome with muni benchmarks following suit, bull flattening over the course of the week by 2-10bps pushing the 30YR MUNI/UST ratio to 86%. Primary issuance for the month remains healthy, outpacing the volumes registered last year during the presidential election as buyside accounts seek to deploy cash across new issue paper with a portion of allotted bonds flowing into muni mutual funds which have witnessed slower-paced activity over recent weeks. New issue activity is positioned to remain stable heading into 2022 as the nation successfully rebounds from pandemic-induced difficulties, further supported by recent economic reports coupled with government-led financial support.
Buyside activity remains intact following last week's calendar which supplied $8.6Bn, offering investors an array of state and local government credits with a noteworthy supply of Texas paper housed throughout the curve. Demand for new issue paper was stable across last week after the Texas Public Finance Authority (-/AAA/AAA/-) sold $832mm of general obligation refunding bonds with the 10/2031 maturity falling +40bps spread to the 10YR UST, providing investors a yield of 1.94%. The State Public Works Board of the State of California (Aa3/A+/AA-/-) also tapped into the primary arena to offer $563mm of lease revenue bond across two series spanning 11/2022-11/2041 with ESG focused investors suppressing yields given strong demand with the 11/2046 maturity landing at a 1.93 yield falling +43bps off the interpolated MAC curve. This week's holiday-shortened calendar is slated to return to double digit levels despite a market closure on Thursday for Veterans Day, with $10.4Bn spanning across 208 new issues. The District of Columbia, Washington D.C. (Aaa/AA+/AA+/-) will lead the negotiated calendar offering $655mm general obligation bonds spanning across two series with maturities ranging from 02/2024-02/2046. The Dallas Area Rapid Transit (Aa2/AA+/-/AAA) will also come to the negotiated market to sell $579mm taxable senior lien sales tax revenue refunding bonds spanning across 12/2022-12/2048 tomorrow 11/09, senior managed by RBC. This week's competitive calendar will span across 104 new issues for a total of $2.95Bn with the State of California (Aa2/AA-/AA) leading the auction schedule across three separate various purpose general obligation tranches spanning 10/2022-10/2037 for an aggregate total of $1.25Bn.
Negotiated ESG Offerings Week of 11/08/2021:
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