BLOG — Nov 15, 2021
Municipal Calendar Week of 11/15/2021
By Matthew Gerstenfeld
Calendar Week of 11/15/2021
New issue activity is positioned to remain steady as participants direct attention towards evolving economic conditions coupled with further federal support appropriated towards state and local issuers via government spending bills. Persistent federal support has remained a focal point for participants whom continue to monitor corresponding future volume impacts fueled by new money issuance stemming from an uptick in infrastructure and social projects nationwide. Despite the flood of federal money approved last week, bi-partisan discussions are currently underway for trillions of additional federal spending geared towards climate change, hinging on increased taxation from corporations and wealthy individuals. Following the approval of the $1 Trillion infrastructure bill last week, market players digested the recent consumer price index which posted a level of 6.2% for the month of October, pushing inflation to levels witnessed during the beginning of the 1990s. As the FOMC initiates a wind down of asset repurchases in effort to curb inflation, participants have questioned the transitory nature of current inflation figures as supply chain bottlenecks and expanding costs for basic goods and services ripple across the country. During this historical time of expansive money supply, equities continue to climb higher with the S&P up nearly ~30% over the past twelve months, an impressive figure considering ~40% of all US dollars in circulation were printed over the last year and half. As markets continue to push higher, municipal bond rate activity has remained stable, outperforming treasuries over the course of last week after bumps of 3-6bps were noted in the intermediate and long range of the curve, coupled with cuts of 1bp in the front end. Fluctuations in rate activity has resulted in lower Muni/UST ratios with the 30YR tenor registering 79%, down from 86% the week prior as investors seek opportunistic entry points in effort to deploy capital. As institutional demand continues to run strong for new issue paper, muni mutual fund inflows have surged, complemented by this month's performance which has heavily surpassed November 2020 by ~275% after the market witnessed a flood of issuance ahead of last year's presidential election, placing munis on track to fall slightly below last year's record volume.
Firm buyside participation has paired well with last week's double digit weekly calendar which supplied $10.9Bn, offering accounts greater par size after a large presence from the state of California accounting for nearly $3Bn in volume. Investor demand was front and center after the District of Columbia (Aaa/AA+/AA+/-) priced $653mm general obligation bonds across 02/2024-02/2046 with buyside activity suppressing yields and driving bumps of 2-18bps across the curve with the greatest interest noted in the 2046 maturity falling +22bps off the interpolated MAC, yielding allotted investors 1.70%. The Dallas Area Rapid Transit (Aa2/AA+/-/AAA) also experienced robust investor demand after selling $576mm senior lien sales tax revenue refunding bonds with maturities spanning 12/2022-12/2048 and bumps of 10-15bps evenly distributed across the scale with the 2031 maturity falling +45bps off the 10YR UST following strong order flow. This week's calendar is slated to climb to $14.2Bn spanning across 352 new issues with the State of Mississippi (Aa2/AA/AA/-) leading the negotiated calendar offering S1.12Bn of general obligation bonds spanning across three series with maturities ranging from 10/2022-10/2041. The California Health Facilities Financing Authority (Aa3/AA-/AA-) will also tap into the negotiated market to sell $1.05Bn revenue bonds with funds designated for the Cedars-Sinai Health system, selling on Wednesday 11/17 and senior managed by Barclays. This week's competitive calendar will span across 187 new issues for a total of $3.33Bn with King County, Washington (Aaa/AAA/AAA) leading the auction schedule paired with the Public Utilities Commission of the City and County of San Francisco, CA selling a combined $650mm across four tranches with three carrying a green bond designation.
Negotiated ESG Offerings Week of 11/15/2021:
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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.