Monday saw a few municipal bond deals over $100 million get accelerated to price earlier in the week as the unique names and desire to frontload ahead of an influx of supply led issuers to price the deals early.
The deals included the North Carolina Finance Agency with $299 million of home ownership revenue bonds; Clark County, Nevada, with $206.765 million of airport system subordinate lien revenue bonds; the Virginia Commonwealth Transportation Board with $176.67 million of federal transportation grant anticipation revenue and refunding notes; and the Alaska Housing Finance Corp. with $115 million of state capital project bonds.
Part of the acceleration on Monday stems from having names that were different enough to draw interest, said Kim Olsan, senior fixed income portfolio manager at NewSquare Capital.
Unlike New York City or California GOs — which are names that many market participants own — it's rare for anyone to be overallocated in North Carolina or housing bonds, Olsan said.
Furthermore, there is enough "uniqueness" to the deals that were accelerated that they probably saw pretty good retail order flow. And then for an institutional order period, they needed to protect some of those orders, so they can "cut off" the retail order, she said.
The quartet of accelerated deals joins at least 25 additional unique credits above $100 million coming to market, a major contributor to the surging supply of $18 billion to $20 billion this week.
Some deals may have been accelerated to get ahead of an elevated calendar.
"That might be why they chose the price on Monday" compared to later in the week, as "out of concern of [the heavy calendar] causing a little stress and higher yields," said Kevin McGuigan, director at Municipal Market Analytics.
Therefore, issuers may have wanted to get the deals done early before the flood of issuance starts to unwind, he noted.
The accelerated deals could also be making up for last week's "missed opportunity" as, amid heavy inflows into muni mutual funds, the calendar was relatively light. That forced many investors to move into the secondary, which probably contributed to the strength in benchmarks, McGuigan said.
Deals that come earlier in the week during a robust week of issuance can often see stronger order books as buyers deploy fresh cash, especially entering a busy redemption cycle, Olsan said.
"If you can pop your deal in early Monday, get it wrapped up, definitely by Tuesday morning," then you're not necessarily competing for attention late in the week and oftentimes ahead of key economic data when buyers may turn cautious, she noted.
