Municipal yields rose slightly Monday but largely ignored early morning weakness from U.S. Treasuries and equities in response to
The two-year ratio Monday was at 72%, the five-year at 72%, the 10-year at 74% and the 30-year at 90%, according to Municipal Market Data's 3 p.m. ET read. ICE Data Services had the two-year at 70%, the five-year at 71%, the 10-year at 73% and the 30-year at 90% at 4 p.m.
"The downgrade was inevitable and pretty irrelevant," said James Pruskowski, chief investment officer at 16Rock Asset Management.
"Munis are no longer moving on headlines; they're reacting to rates and supply," he said, which is playing out again Monday after a choppy March and April.
"What the downgrade really shows is just how structurally independent this market is from Washington's credit mess," Pruskowski said. "Sure, there will be some noise in federally linked sectors, but the real story is the capital shift. Foreign investors now have more reason to gradually rotate out of dollars, while domestic buyers should be even hungrier for scarce, high-quality assets. That is as much an opportunity as it is a challenge."
The muni market saw little fallout from Moody's downgrade, said Ajay Thomas, head of public finance at FHN Financial, noting the market may be reacting more toward
Maryland GOs have often been looked at historically as a "bellwether" in the MMD scale, "so you may see muni credits in other states reprice off of that action more so than the United States' downgrade," he said.
Municipals were slightly weaker throughout the day, with AAA scales seeing yields cut up to three basis points, depending on the curve, to end the day.
At the start of the day, USTs were flat on the short end but moved eight basis points higher on the long end, with the 30-year topping 5%, the highest level since November 2023, as "Moody's U.S. debt downgrade has triggered a global de-risking," said J.P. Morgan strategists, led by Peter DeGroot.
However, by day's end, UST yields retreated. UST yields fell two to four basis points near the close.
Moody's attributed the downgrade to an "increase over more than a decade in government debt and interest payment ratios and levels that are significantly higher than similar rated sovereigns."
Over a decade later, in August 2023,
Fitch also downgraded certain municipal bonds tied directly to the creditworthiness of the federal government.
Moody's downgrade makes this week's $10-billion-plus tax-exempt calendar more of a challenge, "increasing the probability of ETF outflows against the already challenging backdrop of waning mid-month reinvestment and less compelling relative value," J.P. Morgan strategists said.
Despite this, the "heavier lift" for munis this week comes from the influx of supply, rather than Moody's downgrade of the U.S. sovereign credit, said Tim McGregor, managing partner at Riverbend Capital Advisors.
This week's issuance will be "jam-packed" and front-loaded to try to get all these deals done, he said.
Deals priced Monday may be more defensive than they would be if the market was up, said Ronald Banaszek, SVP and lead underwriter at Blaylock Van.
Both Moody's downgrade of the U.S. and gilt-edged Maryland raise credit awareness, McGregor said.
"Credit is and should be on people's minds," potentially creating a bit of credit spread widening, though it's hard to differentiate whether that's happening now or new deals are coming at a bigger discount because there are so many of them to clear the market, he said.
In the primary market Monday, Stifel priced for Aurora Public Schools, Colorado, (Aa2/AA//) $450 million Colorado State Intercept Program-insured GOs, with 5.5s of 12/2025 at 3.02%, 5.5s of 2033 at 3.04%, 5.5s of 2035 at 3.55%, 5.5s of 2040 at 4.07%, 5.5s of 2045 at 4.49% and 5.5s of 2047 at 4.56%, callable 12/1/2035.
Piper Sandler priced for the Gardner Edgerton School District No. 231, Kansas, (/AA-//) $127.195 million GO refunding and improvement bonds, with 5s of 10/2027 at 2.99%, 5s of 2030 at 3.11%, 5s of 2035 at 3.64%, 5s of 2040 at 4.20%, 5s of 2045 at 4.63% and 5.25s of 2050 at 4.81%, callable 10/1/2034.
Stifel priced for the Southwestern Illinois Development Authority (/AA//) $101.96 million BAM-insured Triad Community Unit School District #2 Project local government program revenue bonds, Series B, with 5s of 4/2036 at 3.94%, 5s of 2040 at 4.37%, 5.5s of 2045 at 4.72% and 5.5s of 2050 at 4.88%, callable 4/1/1034.
AAA scales
MMD's scale was cut two basis points. The one-year was at 2.85% (+2) and 2.86% (+2) in two years. The five-year was at 2.92% (+2), the 10-year at 3.29% (+2) and the 30-year at 4.45% (+2) at 3 p.m.
The ICE AAA yield curve was cut up to two basis points: 2.86% (unch) in 2026 and 2.82% (unch) in 2027. The five-year was at 2.92% (unch), the 10-year was at 3.28% (+1) and the 30-year was at 4.42% (+2) at 4 p.m.
The S&P Global Market Intelligence municipal curve was cut one to two basis points: The one-year was at 2.85% (+2) in 2025 and 2.86% (+2) in 2026. The five-year was at 2.92% (+1), the 10-year was at 3.30% (+1) and the 30-year yield was at 4.44% (+1) at 4 p.m.
Bloomberg BVAL was cut one to three basis points: 2.83% (+1) in 2025 and 2.88% (+2) in 2026. The five-year at 2.98% (+2), the 10-year at 3.31% (+2) and the 30-year at 4.42% (+2) at 4 p.m.
Treasury yields saw small gains.
The two-year UST was yielding 3.971% (-3), the three-year was at 3.947% (-4), the five-year at 4.062% (-3), the 10-year at 4.458% (-2), the 20-year at 4.951% (-2) and the 30-year at 4.922% (-2) at the close.
Primary to come
The Kansas Department of Transportation (Aa2/AA//) is set to price Wednesday $730.765 million highway revenue and refunding bonds, Series 2025A, serials 2026-2044. J.P. Morgan.
The New Jersey Educational Facilities Authority (Aaa/AAA//) is set to price Tuesday $705.045 million Princeton University revenue bonds, consisting of $593.76 million of Series 2025A and $111.285 million of Series 2025B, Morgan Stanley.
The Washington Health Care Facilities Authority (/A/A+/) is set to price Wednesday $641.17 million Multicare Health System revenue bonds, consisting of $423.07 million of Series 2025A fixed rate bonds, serials 2026-2045, term 2051; $109.595 million of Series 2025B put bonds, serial 2055; and $108.505 million of Series 2025C put bonds, serial 2055. BofA Securities.
The Leander Independent School District, Texas, is set to price Tuesday $520.363 million PSF-insured unlimited tax school building and refunding bonds, consisting of $481.372 million of Series 2025A (/AAA/AAA/), serials 2026-2045, terms 2050, 2055, and $38.991 million of Series 2025B (/AA/AA+/), serials 2026-2034. J.P. Morgan.
Boston (Aaa/AAA//) is set to price Wednesday $460.825 million of Series A GOs, serials 2026-2045. Raymond James.
Charlotte, North Carolina, is set to price Wednesday (Aa3//AA-/) $307 million airport revenue bonds, consisting of $281.875 million of non-AMT bonds, Series 2025A, serials 2026-2045, terms 2050, 2055, and $25.125 million of AMT bonds, Series 2025B, serials 2027-2044. BofA Securities.
Williamson County, Texas, (/AAA/AAA/) is set to price Wednesday a $304.41 million deal, consisting of $146.29 million unlimited tax road bonds, serials 2026-2045; $67.15 million limited tax refunding and park bonds, serials 2026-2045; and $90.97 million limited tax notes, serials 2026-2032. Raymond James.
Fort Bend County, Texas, (A2/AA/A+/) is set to price Wednesday $271.18 million Assured Guaranty-insured senior lien toll road revenue and refunding bonds, serials 2026-2045, terms 2050, 2055. Cabrera Capital Markets.
Polk County, Iowa, (Aaa/AAA//) is set to price Wednesday $237.83 million GO capital loan notes, consisting of $169.65 million of Series 2025A, serials 2027-2045, and $68.18 million of Series 2025B, serials 2027-2045. J.P. Morgan.
The North Carolina Housing Finance Agency (Aa1/AA+//) is set to price Tuesday $206.555 million taxable home ownership revenue bonds, Series 58-B, serials 2026-2037, terms 2040, 2045, 2050, 2056. RBC Capital Markets.
The College Station Independent School District, Texas, (Aaa///) is set to price Tuesday $192.165 million unlimited tax school building and refunding bonds, serials 2026-2050. Jefferies.
The Maryland Department of Housing and Community Development (Aa1//AA+/) is set to price Tuesday $155 million taxable social residential revenue bonds, 2025 Series D, serials 2026-2037, terms 2040, 2045, 2051, 2055. BofA Securities.
The Virgin Islands Transportation and Infrastructure Corp. (/A//) is set to price Tuesday $151.25 million grant anticipation revenue bonds, serials 2025-2044. Ramirez.
Tempe, Arizona, (/AAA/AAA/) is set to price Tuesday $148.585 million GOs and GO refunding bonds, serials 2026-2045. RBC Capital Markets.
The Rhode Island Health And Educational Building Corp. (/BB-//) is set to price Thursday $143.285 million CharterCARE Health of Rhode Island Obligated Group hospital financing revenue bonds, consisting of $87.05 million Series 2025A tax-exempts, terms 2040, 2045, 2050, 2055, and $56.235 million Series 2025B taxable, serial 2035. Barclays.
New Braunfels, Texas, (Aa1///) is set to price Wednesday $134.24 million utility system revenue refunding bonds, serials 2025-2056. Piper Sandler.
The Florida Housing Finance Corp. is set to price Wednesday $130 million non-AMT homeowner mortgage revenue bonds, 2025 Series 3, serials 2027-2037, terms 2040, 2045, 2050, 2056, 2056. RBC Capital Markets.
The Ernest N. Morial New Orleans Exhibition Hall Authority (Aa3//AA+/) is set to price $125 million special tax revenue bonds. Morgan Stanley.
Lakeland, Florida, (Aa2//AA+/) is set to price $112.355 million capital improvement revenue and revenue refunding bonds, consisting of $74.47 million Series 2025A non-AMT refunding bonds, serials 2025-2045; $12.735 million Series 2025B AMT refunding bonds, serials 2026-2045; $25.15 million Series 2025C taxables, serials 2026-2045. Wells Fargo.
The Osceola County School District, Florida, (Aa2/NR/AA/) is set to price Tuesday $109.315 million capital outlay sales tax revenue bonds, serials 2026-2036. Raymond James.
Competitive
Loudoun County, Virginia, is set to sell $208.08 million GO public improvement bonds, Series 2025A, at 10:30 a.m. eastern Tuesday.
The North Texas Municipal Water District is set to sell $204.175 million Panther Creek Regional Wastewater System contract revenue bonds at 11 a.m. Thursday.
The South Dakota Conservancy District is set to sell $198.24 million SRF program bonds, Series 2025A, at 11:15 a.m. Wednesday.
Montgomery County, Pennsylvania, is set to sell $148.855 million GOs at 10:30 a.m. Wednesday.
Chattanooga, Tennessee, is set to sell $146.935 million electric system refunding revenue bonds at 10 a.m. Wednesday.
The Salt Lake City School District Board of Education, Utah, is set to sell $140.95 million GOs at 11:30 a.m. Wednesday.
Scottsdale, Arizona, is set to sell $107 million Project of 2019 GOs at 10 a.m. Tuesday.
The Fayette County Board of Education, Kentucky, is set to sell $106.185 million GO refunding bonds at 11 a.m. Tuesday.
The North Kansas City School District No. 74, Missouri, is set to sell $100 million GO improvement bonds at 11:30 a.m. Tuesday.
