Market gearing up for hefty supply slate

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Municipals were little changed on Monday, finishing out the day steady in quiet trading ahead of the week’s hefty new issue supply slate.

About $14 billion of new deals are slated to hit the market, with almost $5 billion of that total being taxables.

Municipals rallied across the curve last week, according to Wells Fargo Securities.

“Tax-exempt munis outperformed Treasuries by six basis points, mortgage-backed securities by 41 basis points and high-yield corporates by 17 basis points week over week,” Wells Fargo said in a Monday market comment.

For the week, taxable munis and Build America Bonds outperformed all fixed-income asset classes Wells Fargo said, including investment-grade corporates by eight and 16 basis points and high-yield corporates by 59 and 57 basis points.

Primary market
On Tuesday, Goldman Sachs is set to price the Rector and Visitors of the University of Virginia’s (Aaa/AAA/AAA/NR) $600 million of taxable general revenue pledge bonds.

Since 2010, the university has issued almost $3 billion of bonds, with the most issuance occurring in 2019 when it sold $787 million of securities. It didn't come to market in 2012, 2014 or 2016.

Also on Tuesday, Siebert Williams Shank is set to price the cities of Dallas and Fort Worth, Texas’ (A1/A/A+/AA) $391 million of joint revenue refunding bonds, not subject to the alternative minimum tax, for the Dallas-Fort Worth International Airport.

The Dormitory Authority of the State of New York is selling two issues of revenue bonds totaling $467 million on Tuesday.

Siebert is set to price DASNY’s $329 million of taxable Series 2020A (Aa3/NR/A+/NR) State University of New York dormitory facilities revenue bonds.

A pre-marketing scale circulating Monday showed the deal at 140 basis points above the comparable Treasury security in 2026 to 200 basis points above Treasuries in 2035 and 175 basis points above in 2040.

BofA Securities is slated to price DASNY’s $138 million of Series 2020 (Aa1/AA+//) FHA-insured mortgage hospital revenue bonds for the Maimonides Medical Center.

In the competitive arena on Tuesday, the state of Washington is selling $652.7 million of general obligation bonds in four offerings.

The deals consist of $294.245 million of Bid Group 2 various purpose GOs, $205.245 million of Bid Group 1 various purpose GOs, $116.31 million of Series 2021B motor vehicle fuel tax and vehicle-related fees GOs and $36.9 million of Series 2021T taxable GOs.

On Wednesday, Morgan Stanley is set to price Texas Transportation Commission’s (Aaa/NR/AAA/AAA) $1.047 billion of taxable general obligation mobility fund refunding bonds.

Secondary market
Municipals were steady across the board, according to readings on MMD’s AAA benchmark scale Monday. Yields on the 2021 and 2023 maturities were unchanged at 0.22% and 0.24%, respectively. The yield on the 10-year GO muni was flat at 0.81% while the 30-year yield was steady at 1.53%.

The 10-year muni-to-Treasury ratio was calculated at 127.0% while the 30-year muni-to-Treasury ratio stood at 114.6%, according to MMD.

“Munis outperformed U.S. Treasuries in 10-year by five basis points and were flat in 30-year,” ICE Data Service said in a Monday market comment. “The 10-year ratio declined on the outperformance.”

The ICE AAA municipal yield curve showed short yields unchanged at 0.190% in 2021 and 0.208% in 2022. The 10-year maturity was flat at 0.785% and the 30-year was steady at 1.563%.

ICE reported the 10-year muni-to-Treasury ratio stood at 131% while the 30-year ratio was at 114%.

The IHS Markit municipal analytics AAA curve showed the 2021 maturity yielding 0.21% and the 2022 maturity at 0.24% while the 10-year muni was at 0.82% and the 30-year stood at 1.55%.

Munis were little changed on the MBIS benchmark and AAA scales.

Treasuries were little changed as stock prices traded up.

The three-month Treasury note was yielding 0.138%, the 10-year Treasury was yielding 0.640% and the 30-year Treasury was yielding 1.117%.

UBS GWM: Wealthy investors hit by COVID-19
Wealthy investors expect lasting lifestyle changes after the COVID-19 pandemic, according to a survey released Monday by UBS Global Wealth Management.

Three-quarters of the 3,750 investors around the world who were polled foresee permanent lifestyle shifts, with two-thirds saying the coronavirus has altered how they think about their finances.

Latin American investors were the most likely to see a lasting impact, followed by investors in the United States.

As the U.S. works to contain the pandemic, 82% of American investors see their old way of life changing forever, which is above the global average of 75%. However, only 22% in the U.S. said the pandemic significantly affected them, below the global average of 25%.

Sixty-seven percent of all investors said the pandemic has affected how they think about their money: 56% worry about not having enough saved if there is another pandemic; 58% worry about working longer to make up for retirement losses; 60% worry about being a financial burden to their family if they get sick; and 54% worry about leaving enough money for the next generation.

Overall, 83% of investors want more guidance than usual from their financial advisor on their monetary affairs during the pandemic.

Millennials surveyed were more inclined to say the pandemic affected them financially and were more concerned about their finances than older generations.

Seventy-three percent of millennials felt they were financially impacted by the pandemic. Seventy-four percent said the pandemic impacted how they think about their money. Millennials were also concerned about having to work longer to make up for losses, having enough money saved and losing their job in the current environment.

Millennials were also concerned about having their money make a societal impact, with 69% interested in sustainable investing and 60% in philanthropy.

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Primary bond market Secondary bond market The Rector and Visitors of the University of Virginia New York State Dormitory Authority State of New York
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