This week's two largest deals being moved to day-to-day status may stabilize the market, analysts said.
The two deals, $1.81 billion Municipal Improvement Corp. of Los Angeles deal and the $1.7 billion New Jersey Transportation Trust Fund Authority refunding deal, were both shelved on Monday as yields surged and volatility continued to roil financial markets.
This pushes issuance for the week down to $6.5 billion, according to LSEG.
With billions of dollars taken off the new-issue calendar and moved to the day-to-day calendar, it adds a level of relief to the market, which already faces an "oversupply" of bonds, said Kyle Gerberding, director of trading, portfolio manager and partner at Asset Preservation Advisors.
Less supply coming to market lets "existing float get distributed," said Kim Olsan, senior fixed income portfolio manager at NewSquare Capital.
And even with the deals shelved, there shouldn't be a problem finding comparable bonds, "given how much we're seeing in the secondary," Gerberding said.
If these deals did come to market as scheduled, it could "jar" rates more if the order books were lighter than needed, Olsan noted.
Once rates stabilize, the credits now on hold will do fine, she said.
The last time multiple deals were shelved was during the post-Liberation Day selloff in April 2025, but most of the deals then were smaller.
This time, the two mega deals join $3.43 billion already on day-to-day status, with most of the total coming from a trio of sizable deals: $1.49 billion from the California Community Choice Financing Authority, a $797 million refunding deal from the North Texas Tollway Authority and $790.8 million from the Convention Center Authority of the Metropolitan Government of Nashville and Davidson County.
Market volatility has been a key reason some of these issues have been moved to the day-to-day calendar, said Kevin McGuigan, director at Municipal Market Analytics.
"It's just a very uncertain time for issuers to price bonds," he said.
Issuers tend to shy away from pricing bonds on days when the Federal Open Market Committee meets, or when the consumer price index is released, McGuigan said.
"Despite there not being any scheduled economic data release or Fed decision, every day carries the potential for crazy volatility," he said.
Munis have experienced an extended selloff since the start of the month, as the two-year MMD yield has risen 106 basis points. The 10-year MMD yield has risen 81 basis points, reaching its highest level since 2008, and the 30-year MMD yield has cheapened 60 basis points, reaching its highest level since 2011.
The surge in yields has changed the dynamics for these deals, especially the refunding deals, McGuigan said.
At least two refunding deals — the $1.7 billion TTFA and the $797 million North Texas Tollway Authority, which was moved to the day-to-day calendar a few weeks ago — have been shelved, as the economics may no longer make sense.
"While the increase in yields may be taking some of the planned refunding deals out of the money, new-money issuers have to decide whether to price into a choppy market or wait to price later in October when supply could be even more robust," said CreditSights strategists.
September is on track to be the worst-performing month since April 1987, "rates have moved sharply higher, open-end fund flows have weakened, reinvestment demand has tapered off from the stronger summer months, supply has been elevated, and Monday's $6.7 billion of [bids wanteds] was the third highest on record," said Travis McGahey, vice president at investment manager Payden & Rygel.
Elevated bids wanted in competition activity likely stems in part from investors harvesting tax losses following the "sharp selloff," putting even more bonds into the secondary market, he said.
"With that much secondary supply available at cheaper levels, investors can recognize that yields are becoming increasingly attractive while still being reluctant to commit capital until they have greater confidence that rates are stabilizing," McGahey said.
Therefore, there's not much incentive to rush in "if you think you may be offered an even better yield tomorrow," he said.
