Finance

Municipal bond mutual funds saw the second week of outflows as investors pulled $217.6 million from the funds after $546.2 million of outflows the week prior, according to LSEG Lipper. High-yield saw inflows again.

The ongoing influx of new-issue supply has pushed muni-UST ratios to at or near year-to-date highs, J.P. Morgan strategists said.

Mayor Brandon Johnson and Chicago's finance team talked up the Windy City's economy and talked up bond sale plans at an event for municipal bond investors.

Several weeks of elevated supply should theoretically be "weighing more on performance, but the market is now just ahead of its largest reinvestment season, which so far in 2024 has become even more pronounced, with an additional $19.5 billion scheduled for call/redemption between [June 1 and August 30]," said Matt Fabian, a partner at Municipal Market Analytics.

Fitch raised its rating on about $260 million of municipal bonds, backed by payments-in-lieu-of-taxes, from C — the lowest category before default — to CC.

"While we acknowledge that the market tone is weaker [Monday], we are generally constructive regarding valuations and expect this week's supply to be absorbed fairly well after last week's giveback of the richening witnessed over prior weeks," said Vikram Rai, head of municipal markets strategy at Wells Fargo.

"The industry is built on relationships, and it's powered by technology," said Josh Rosenblum, head of algorithmic trading at Brownstone.

The $684 million turnpike deal is one of a spate of recent forward delivery deals driven by interest rate uncertainties. 

The Virginia Beach Development Authority priced about $189 million of debt on Thursday with some of the bond proceeds financing portions if the attraction.

There are nearly 30 new-issues over $100 million on tap across the credit spectrum, led by the week's largest negotiated deal from Harris County, Texas, with $950 million of toll road first lien revenue and refunding bonds. The competitive calendar ticks up with several high-grade names.

"In terms of credit quality, high-yield funds proved resilient" while investment-grade funds saw outflows of $673 million, noted J.P. Morgan's Peter DeGroot in a market note.

Fitch Ratings cited new rating criteria and increases in state funding in giving Milwaukee a three-notch bond rating boost. The outlook is stable.

The CPI print keeps the possibility of the Fed cutting rates at least once this year, potentially at least two rate cuts if the data continues to point to a trend of inflation falling further, said Jeff Lipton, a research analyst and market strategist.

Catch up on our recent coverage of the various legal issues and considerations impacting BAB redemptions.

This week's issuance is above the 2024's year-to-date weekly average of $7.6 billion, said Chris Brigati, senior vice president and director of strategic planning and fixed income research at SWBC.

The muni market improvement has the asset class seeing gains of 1.08% so far in May, as year-to-date returns inch closer to "positive territory," said Jason Wong, vice president of municipals at AmeriVet Securities.

The New York City Transitional Finance Authority leads the new-issue calendar with a total of $1.8 billion of future tax-secured subordinate bonds in the negotiated and competitive markets.

Municipal bond mutual funds saw another week of inflows as investors added $1.053 billion in the week ending Wednesday, the second-largest figure this year.

A $327 million competitive bond deal, including $35 million of taxables, will fund renovations to the stadium and a new football operations building.

The University repriced to lower yields up to 15 basis points Wednesday while Illinois accellerated its pricing of its tax-exempt GOs and were repriced yesterday afternoon with bumps of 10 to 13 basis points and saw $1.5 billion of retail orders alone.