Jessica Lerner

Absolute yields "remain attractive in the context of the trading range over the past three years and our longer-term projections for lower rates this year," according to J.P. Morgan strategists.

The onslaught of new-issuance and approaching month- and quarter-end led triple-A yields to rise up to seven basis points on the short end and as much as three to five elsewhere along the curve, despite stronger U.S. Treasuries. Short ratios rose as a result.

The UC Regents will close the books on its $1.1 billion refunding deal that included the refunding BABs Wednesday. Investors do not appear to be penalizing the issuer in secondary trading as spreads have stayed at or near the original pricing.

This week's new-issue calendar grows and includes some "common benchmark names like CA GO, NYC GO, and WA GO," Birch Creek strategists said.

The calendar is led by several high-profile deals, including $2.7 billion of GOs from California, $1.5 billion from New York City and $1.1 billion from Washington. High-yield gets another dose of unrated project finance debt from Miami Worldcenter Project tax increment revenue bonds. The Bond Buyer 30-day visible supply sits at $12.06 billion.

Hallam will handle high-yield muni sales and trading, focusing on large institutional accounts at the firm.

The Washington refunding deal is built on an extraordinary optional redemption of Build America Bonds despite criticism from investors who hold them.

The extraordinary redemptions being used to call Build America Bonds "are based on a creative but flawed legal argument driven by the current change in interest rates," said Kramer Levin partner Amy Caton.

Citi's exit comes amid the larger trend of broker-dealers downsizing balance sheets, which can hurt secondary market liquidity, particularly in times of stress. Other market players are coming into the fold.

"The balance of March may continue to be better-than-expected, particularly given existing demand and decent reinvestment needs over the next 30 days," according to Oppenheimer's Jeff Lipton.

The New York MTA has not sold fixed-rate transportation revenue bonds since February 2021. The first maturity of that deal (4% 11/15/44) priced at +81 and was evaluated at +78 as of Wednesday by BVAL, according to CreditSights strategists. The same maturity but with a 5% coupon was priced at +59 to BVAL.

Marc Livolsi was promoted to lead U.S. Public Finance New Issue Marketing and Business Development, and Evan Boulukos will lead Assured's Secondary Markets desk, both of whom will report to Chris Chafizadeh, senior managing director and co-head of Public Finance.

Inflows continued for the third consecutive week as LSEG Lipper report fund inflows of $295.5 million for the week ending Wednesday with high-yield hitting the 10th consecutive week of positive flows.

BofA Securities is the latest firm to scoop up former employees from Citi, which decided to shutter its muni division late last year.

The Investment Company Institute reported larger inflows into municipal bond mutual funds for the week ending March 6, with investors adding $956 million to funds following $57 million the week prior.

Narens' hiring complements Stifel's public finance practice and the types of deals the firm is doing, said Betsy Kiehn, managing director and head of Stifel's Municipal Capital Markets Group.

"The muni AAA [high grade] curve has been relatively steady thus far in March, but lags relative to the broader fixed income market after sizable muni outperformance in February," said J.P. Morgan strategists. 

Over the past few years, retail has been a growing portion of the muni market, starting when the reduction of corporate taxes made it less advantageous for insurance companies and banks to own munis, said David Litvack, a tax-exempt strategist and chief investment officer at BofA.

Issuers have increased their debt sale in recent weeks, as issuance has come in above $70 billion year-to-date, according to LSEG data

Market participants said it is yet to be seen whether issuers will pull back their BABs refundings due to concerns after several bondholders sent a letter to the trustee on a Regents of the University of California deal, saying it was "prohibited" from executing the redemption.