Municipals have been regular Friday forward of a $12.9 billion new-issue calendar, led by two mega offers. U.S. Treasuries have been weaker, and equities ended blended.
The 2-year muni-UST ratio Friday was at 65%, the five-year at 63%, the 10-year at 71% and the 30-year at 89%, in accordance with Municipal Market Knowledge’s 3 p.m. EDT learn. ICE Knowledge Companies had the two-year at 64%, the five-year at 63%, the 10-year at 71% and the 30-year at 90% at a 4 p.m. learn.
“Total muni efficiency throughout shutdowns isn’t overly conclusive: generally they outperform barely, generally they underperform, however the common isn’t removed from zero,” mentioned Barclays strategists, led by Mikhail Foux.
There is a little more “directionality” in timing, as tax-exempts often outperform a little bit bit forward of shutdown and underperform afterward, they mentioned, as seen over the past shutdown that began on Dec. 21, 2018, and ended on Jan. 25, 2019.
Charges typically decline going into and after the start of presidency shutdowns, whereas munis barely lag, however there’s a reversal if shutdowns final lengthy sufficient, Barclays strategists mentioned.
The present shutdown might be protracted, as the 2 sides are nowhere close to a decision, they mentioned.
Treasury charges have already fallen this week, due partially to the shutdown and softer employment information, and munis have lagged barely, Barclays strategists mentioned.
The brand new-issue calendar is at $12.948 billion, with $10.569 negotiated offers on faucet and $2.379 billion of aggressive ones.
The Texas Transportation Finance Corp. leads the negotiated calendar with $1.739 billion of subordinate tier toll income and refunding bonds, adopted by New York Metropolis with $1.5 billion of normal obligation bonds.
The aggressive calendar is led by the Maryland Division of Transportation with $842.705 million of consolidated transportation bonds in two collection.
In October, provide is often a key driver of underperformance, and that’s anticipated to proceed this 12 months, in accordance with Barclays strategists.
Whereas “the 30-day seen tax-exempt provide isn’t overwhelming in the intervening time, it ought to choose up beginning subsequent week, and the following three to 4 weeks needs to be fairly heavy, bringing the entire to $50 billion to $55 billion for the month,” they mentioned.
“On the detrimental aspect, we now have a lot heavier provide (though it ought to doubtless final solely a month or month and a half); on the constructive aspect, we now have fund inflows, rather more strong retail investor participation and light-weight seller inventories (that are considerably decrease than the typical for the 12 months),” Barclays strategists mentioned.
For an inefficient market, the market is behaving effectively, and that begins with the underwriters, mentioned Mark Paris, CIO and head of municipals at Invesco.
“Underwriters have achieved a extremely good job in ensuring issues clear,” he mentioned.
The times of massive retailers taking down 20% of offers are gone, Paris mentioned.
“They’re doing a great job of pricing the offers the precise approach, speaking to individuals in regards to the constructions that they need,” he mentioned.
“I get a variety of calls from buying and selling to say, ‘Did you thoughts speaking to my underwriter?’ As a result of it is necessary to get that half proper, in any other case the deal goes to trigger much more havoc within the market,” Paris added.
And regardless of a big broker-dealer leaving the muni market, some smaller retailers have stepped up, he famous.
Buyside gamers have been prudent of their choices, Paris mentioned.
“There’s been a variety of yield swaps happening, on my aspect and different enterprise to up your guide yield and guide losses and all that stuff. And I believe that has led to sufficient of a movement to cowl these offers,” he mentioned.
Within the main market Friday, Goldman Sachs priced for the Decrease Alabama Gasoline District (A1///) $669.285 million of gasoline venture income refunding bonds, Collection A, with 5s of 12/2031 at 3.84% and 5s of 2033 at 4.12%, callable 9/2033.
AAA scales
MMD’s scale was unchanged: 2.40% in 2026 and a pair of.32% in 2027. The five-year was 2.32%, the 10-year was 2.91% and the 30-year was 4.21% at 3 p.m.
The ICE AAA yield curve was little modified: 2.36% (unch) in 2026 and a pair of.29% (+1) in 2027. The five-year was at 2.32% (unch), the 10-year was at 2.91% (unch) and the 30-year was at 4.23% (unch) at 4 p.m.
The S&P International Market Intelligence municipal curve was little modified: The one-year was at 2.39% (unch) in 2025 and a pair of.30% (+1) in 2026. The five-year was at 2.31% (+1), the 10-year was at 2.91% (unch) and the 30-year yield was at 4.21% (unch) at 3 p.m.
Bloomberg BVAL was unchanged: 2.29% in 2025 and a pair of.25% in 2026. The five-year at 2.28%, the 10-year at 2.88% and the 30-year at 4.21% at 4 p.m.
Treasuries have been weaker.
The 2-year UST was yielding 3.575% (+3), the three-year was at 3.59% (+4), the five-year at 3.714% (+4), the 10-year at 4.12% (+4), the 20-year at 4.68% (+3) and the 30-year at 4.713% (+2) close to the shut.
Main to come back
The Texas Transportation Finance Corp. (Aa1/AA+//) is about to cost Tuesday $1.739 billion of subordinate tier toll income and refunding bonds, consisting of $1.678 billion of tax-exempt Collection 2025A bonds and $61.2 million of taxable Collection 2025B bonds. BofA Securities.
New York Metropolis (Aa2/AA/AA/AA+/) is about to cost Wednesday $1.5 billion of GOs, Fiscal 2026 Collection D. J.P. Morgan.
The PeaceHealth Obligated Group (/A-/A+/) is about to cost Tuesday $787.356 million of taxable bonds. Morgan Stanley.
The San Diego Unified College District is about to cost Wednesday $670 million of GOs, consisting of $7.355 million of taxable Collection P-1 Election of 2008 bonds (Aa2///), $92.645 million of Collection P-2 Election of 2008 bonds (Aa2//AAA/AAA/), $11.115 million of taxable Collection I-1 Election of 2018 bonds (Aa2///), $25 million of Collection I-2 Election of 2018 bonds (Aa2//AAA/AAA.), $213.885 million of Collection I-3 Election of 2018 bonds (Aa2//AAA/AAA/), $13.825 million of taxable Collection C-1 Election of 2022 bonds (Aa2///), $10 million of Collection C-2 Election of 2022 bonds (Aa2//AAA/AAA/), and $296.175 million of Collection C-3 Election of 2022 bonds (Aa2//AAA/AAA/). Jefferies.
The North Texas Tollway Authority is about to cost Monday $627.175 million of system income refunding bonds, consisting of $502.065 million of Collection 2025A bonds (Aa3/AA-//) and $125.11 million of Collection 2025B bonds (A1/A+//). J.P. Morgan.
Massachusetts (Aa1/AAA//AAA) is about to cost Wednesday $493.2 million of commonwealth transportation fund income and refunding bonds, consisting of $325 million of Collection R bonds and $168.2 million of Collection 2025A bonds. J.P. Morgan.
Columbus, Ohio, (Aaa/AAA/AAA/) is about to cost Tuesday $470.405 million of varied goal GOs, consisting of $218.69 million of limitless tax bonds, Collection 2025A; $23.23 million of restricted tax bonds, Collection 2025B, $88.545 million of limitless tax refunding bonds, Collection 2025-1; $31.86 million of restricted tax refunding bonds, Collection 2025-2; $48.165 million of taxable limitless tax bonds, Collection 2025C; and $59.915 million of taxable restricted tax bonds, Collection 2025D. RBC Capital Markets.
Albany Capital Useful resource Corp. (A2/A//) is about to cost Thursday $385.49 million of tax-exempt income refunding bonds (Albany Medical Middle Hospital venture), Collection 2025A. Jefferies.
The New Jersey Housing and Mortgage Finance Company (/AA-//) is about to cost Tuesday $371.695 million of social multi-family income bonds, consisting of $123.09 million of non-AMT bonds, Collection 2025A; $220.87 million of non-AMT bonds, Collection 2025B; and $27.735 million of taxable bonds, Collection 2025C. Wells Fargo.
The California Municipal Finance Authority is about to cost $371.526 million of municipal certificates, Collection 2025-2, consisting of $313.01 million of Class A-1 bonds (/AA-//), $50.156 million of Class A-2 bonds (/BBB//), and $8.36 million of nonrated Class B subordinate bonds. BofA Securities.
The Normal Authority of Southcentral Pennsylvania (Aa3//AA-/) is about to cost Tuesday $270.215 million of bonds (WellSpan Well being Obligated Group), consisting of $92.355 million of Collection 2025A bonds and $177.86 million of Collection 2025B bonds. BofA Securities.
The Oklahoma Municipal Energy Authority (/A/A/) is about to cost Tuesday $248.68 million of energy provide system income and refunding bonds, Collection 2025A. Goldman Sachs.
The South Carolina State Housing Finance and Growth Authority (Aaa///) is about to cost Thursday $195 million of non-AMT mortgage income bonds, Collection 2025C. BofA Securities.
Ohio (A3/A//) is about to cost Thursday $172.815 million of hospital income bonds (College Hospitals Well being System, Inc.), Collection 2025A. BofA Securities.
The Westmoreland County Municipal Authority, Pennsylvania, (/AA//) is about to cost Tuesday $152.355 million of municipal service income refunding bonds, Collection 2025A. Stifel.
The Roanoke Financial Growth Authority, Virginia, (Aa3/AA-//) is about to cost Tuesday $147.95 million of hospital income bonds (Carilion Clinic Obligated group), Collection 2025A. BofA Securities.
The Fontana Public Services Financing Authority (/AA-//) is about to cost Wednesday $135.205 million of lease income bonds, Collection 2025A. Ramirez.
Gadsden, Alabama, (/AA//) is about to cost Tuesday $127.6 million of GO warrants, Collection 2025A. Stifel.
The Construct NYC Useful resource Corp. (/BB+//) is about to cost Thursday $121.765 million of income bonds, consisting of $119.765 million of tax-exempt Collection 2025A bonds and $2 million of taxable Collection 2025B bonds. Raymond James.
The South Carolina Jobs & Financial Growth Authority is about to cost Thursday $113.385 million of senior dwelling income bonds (Connexion Communities venture), consisting of $112.53 million of Collection 2025A1 bonds and $855,000 of Collection 2025A2 bonds. D.A. Davidson.
Larimer County, Colorado, (/AA+//) is about to cost Tuesday $110 million of certificates of participation, consisting of $80.005 million of tax-exempts, Collection 2025A, and $29.995 million of taxables, Collection 2025B. Piper Sandler.
The Tempe Industrial Growth Authority is about to cost Thursday $108.595 million of nonrated income and refunding bonds (Friendship Village of Tempe venture). Ziegler.
Aggressive
The Maryland Division of Transportation (Aa1/AAA/AA+/) is about to promote $497.705 million of consolidated transportation refunding bonds, Collection 2025C, at 11 a.m. Japanese Wednesday, and $345 million of consolidated transportation bonds, Collection 2025B, at 10:30 a.m. on Wednesday.
Oklahoma County is about to promote $215 million of GO restricted tax bonds at 9:30 a.m. Wednesday.
Broward County, Florida, (Aa1/AA+//) is about to promote $158.845 million of water and sewer utility income refunding bonds at 10:30 a.m. Wednesday.
Jersey Metropolis, New Jersey, (A1///) is about to promote $124.45 million of normal enchancment bonds at 11 a.m. Tuesday.
Houston is about to promote $121 million of tax and income notes at 10 a.m. Wednesday.
Frank Gargano contributed to this report.
