Markets

The publicly offered tax-exempt debt product is new for the firm and the collateralized debt obligation structure may be one of the first for the market since the 2008 financial crisis.

Munis are directionally trading with USTs but underperforming in days where USTs rally and outperforming in days where USTs sell-off, said Greg Gizzi, head of U.S. fixed income and head of municipal bonds at Macquarie Asset Management.

The Investing in Our Communities Act, introduced by House members Kustoff, R-Tenn., and Ruppersberger, D-Md., would reinstate tax-exempt advance refunding.

Ambiguous language in the legislation is one of a handful of reasons why issuers have not taken advantage of the new financing tool.

Munis held "their firmer tone as Treasuries continued to rally once more this past week," said Jason Wong, vice president of municipals at AmeriVet Securities.

The City Council will vote Tuesday night on whether to approve bonds for the formerly stalled project.

Municipals' strong fundamentals and high credit quality combined with market inefficiencies and dislocations present opportunities.

Yields on top-rated municipal bonds fell as much as nine basis points on Friday as bank contagion fears resurfaced and investors looked to safe-haven securities. The primary calendar is rebounding, with volume rising to an estimated $5.4 billion in the week ahead.

The rating action affects $423 million in bonds and certificates of participation. The territory's issuer rating was affirmed at speculative-grade Ba1.

Outflows continued as Refinitiv Lipper reported $427.082 million was pulled from municipal bond mutual funds in the week that ended Wednesday after $461.123 million of outflows the week prior.