Chip Barnett

Municipal to U.S. Treasury ratios have been a focus for many participants of late. Historically attractive ratios, low supply, and continued fund inflows are creating some strength in the municipal market.

Richard Taormina, portfolio manager and head of tax aware strategies at JPMorgan Asset Management talks about the effects COVID-19 is having on credits in the municipal bond market and why crossover buyers think this an attractive asset class. Chip Barnett hosts.

Even with the news that New York City is looking to potentially borrow $7B through its Transitional Finance Authority as it faces $9B in lower revenues, the market didn’t blink and TFAs traded firmer.

Credit concern is being lost somewhat in pricing munis and traders said they are looking for alternative benchmarks, even turning to corporates and U.S. Treasuries to price the market.

The primary supply for the holiday-shortened week is projected to dip to just over $4 billion, with a mix of tax-exempt and taxable issuance led by Colorado’s $500 million of certificates of participation.

Taxable equivalent yields on exempts are close to converging into taxables.

Clark Hill senior counsel Andrew Maher will serve a one-year term.

Municipal to U.S. Treasury ratios were attractive, especially on the short end, which drove secondary yields lower.

Eric Fischer returns to the firm and will focus on municipal finance and tender option bonds.

The front of the municipal yield curve is 'astounding' and traders said dealers are uncharacteristically accepting the levels, likely due to the historically attractive ratios.

Magalie Austin takes over from Jonnell Doris, who was named commissioner for Small Business Services.

The primary was up and running Monday with Connecticut’s $850M offering for retail while many Texas issuers were active on the heels of the Fed news that it is open for business for munis.

Uncertainty and volatility have caused a bifurcated market when it comes to credit, and widespread disparity between high-quality and high-yield is complicating matters for issuers.

Yields on all triple-A benchmark curves out to nine years are now below 1%. The largest bumps were again on the very short end of the curve. Lipper reported $580 million of inflows.

Investors are sending the message that higher-grade, longer-term issuers will fare far better than lower-rated, higher-yield ones amid a focus on credit.

The short end of the municipal curve again saw yields fall, but that didn't impede the productivity of the day's new-issue market.

The Fed on Monday essentially said it was standing 10 feet back from the market, allowing it to manage the pandemic-driven crisis itself. Lower-rated issuers may benefit most from the facility.

High-grade trading Friday showed the disparate credit picture that investors are facing; they now need to dig deeper into municipal financials and the backstops on certain bonds.

In the midst of issuer credit deterioration due to coronavirus, muni yields fell and new-deals were priced on the heels of California's $54 billion deficit news.

Primary deals are now coming at tighter spreads to the secondary than they have recently. Cooler heads are appearing on the institutional side, but ICI reports $1.7 billion pulled from muni market mutual funds.