Markets

"As with most fast rallies there are sessions when the market pauses to assess where fair value should play out," said Kim Olsan, senior vice president of municipal bond trading at FHN Financial.

Municipal Market Analytics noted the current size of the outstanding TOB market — at about $50 billion from highs of nearly $500 billion before the Financial Crisis — reflects a reduced credit concentration risk and lower overall leverage.

The rating agency expects that an uptick in revenues will outpace expenses as the not-for-profit hospital industry gets a handle on labor costs.

A constructive trading session in the secondary aided a busy primary once again as investors appear to be more engaged in the asset class.

California and Washington sold four large refunding GO deals in the competitive market while several deals of size priced in the negotiated market led by a $650 million for Arizona's Salt River Project. A constructive secondary led yields to fall three to five basis points.

The upgrade brings Illinois up to the A-minus level across the board. The state had three BBB-minus or equivalent ratings as recently as July 2021.

The recent rally is good news for munis, which have "posted a total-negative return loss for three straight months," said Jason Wong, vice president of municipals at AmeriVet Securities.

While it's been a tough year across fixed-income generally, a Wall Street muni retrenchment marks an opportunity for regional and middle-market firms to gain more of a foothold, market participants said.

Attorney General Ken Paxton put several big banks under a review last month, raising concerns more municipal bond underwriters could be driven out of the state.

Teacher shortages and enrollment declines due to growing charter and private schools are two of the problems affecting school financing.