Primary bond market

Dominick D'Eramo, head of fixed income at Wilmington Trust Investment Advisors, talks with Chip Barnett about how the municipal bond market did in 2020 and what may be on tap for munis in the new year. (12 minutes)

Municipal bond funds saw $2.086 billion of inflows in the week ended Dec. 22, the Investment Company Institute reported Wednesday after a $2.517 billion inflow the week prior.

While there are no major sales on the calendar for this week, some larger deals from and Texas, California, New Jersey and Colorado issuers are on tap for the first few weeks of 2021.

Refinitiv Lipper reported tax-exempt mutual funds saw $1.288 billion of inflows in the week ended Dec. 23, the seventh week in a row investors put cash into the funds.

IHS Ipreo estimates the week's bond volume at $7.3 million in a calendar composed only of small negotiated deals.

A record year of overall issuance, led by a boom in taxables, tells the story of a growing muni market with a broader, more diverse investor base.

Taxable munis have posted the highest returns among all fixed-income indexes this year, BofA said.

The county board signed off on about $600 million of borrowing and the financing teams that will bring the deals to market in January.

Munis were flat Monday as the entire curve was said to be undergoing a consolidation.

Paltry supply will force the secondary to handle the rest of 2020; New York City taxable general obligation bonds trade up by nearly 20 basis points on intermediate bonds.

The entire municipal exempt yield curve is seeing consolidation with a 125 basis point spread between one and 30 years, and sub-1% yields are holding firm inside of 15 years.

The state will repay borrowing by the Michigan Strategic Fund to cover its $600 million preliminary settlement over the Flint water contamination crisis.

The high-yield deal will mark the junk-rated city's third post-bankruptcy general obligation issue on its own credit, without any external support.

ICI reported another $2.3 billion of inflows, new deals continue the march to lower yields and benchmarks rose a basis point seven years and out for the first time since the beginning of December.

The state of Illinois sold $2 billion of three-year notes to the Federal Reserve's Municipal Liquidity Facility at 3.42%.

The municipal market can best be described as a "Goldilocks market" due to accommodative federal monetary policy, strong demand and limited supply, bond director Ben Watkins told the Cabinet.

Even with COVID-19-related shutdowns — a New York City lockdown may be imminent — issuers are pricing bonds into an extremely low-rate environment.

New York State's short-term revenue losses, resulting from coronavirus shutdowns, won't curb enthusiam for the Empire State Development Corp.'s offering, according to market sources.

The LBJ Infrastructure Group, operator of managed lanes on a Dallas highway, will sell $1.2 billion of bonds through a conduit issuer.

Munis firmed Friday, only the second time in December they weren't flat, and more than a few participants are waiting on yields to rise before getting involved, particularly given the rich muni/treasury ratios and low absolute yields.