Primary bond market

Flagship schools in Michigan, Ohio and Iowa made multiple coronavirus-related disclosures in their offering documents.

The new-issue calendar is filling up with deals formerly on the day-to-day slate, however net supply over the summer is expected to total negative $55B, including negative $15B in June, negative $21B in July and negative $19B in August.

The cities enter a primary municipal bond market prepared to absorb $9 billion of deals this week.

In secondary trading municipals ended weaker after a strong employment report.

New deals thrive and inflows continue as Lipper reports $1.2 billion into municipal bond mutual funds.

Primary market deals generated strong demand, and municipals were little changed in secondary trading.

The fragility of the economy amid protests and the continuing coronavirus threats have dealers unloading some risk.

The Wisconsin Center District deal provides some expansion financing and near-term debt relief after the agency was stung by lost conventions and tax revenue.

Wisconsin officials are still assessing the potential impact on its general fund revenues.

State and local governments have increasingly filed COVID-19-related disclosures to the market, but only about 931 issuers out of roughly 40,000 have filed over 1,500 material event notices and continuing disclosures since the pandemic began.

Some investors expressed concern over the market‘s muted reaction to the country’s depth of effects over the current crises.

Tightening spreads and low yields ended the month as demand for municipal bonds is expected to overwhelm $6 billion in volume heading to the primary.

Bond volume was 4.2% lower than it was a year ago but increased from March and April’s low totals.

Municipal to U.S. Treasury ratios have been a focus for many participants of late. Historically attractive ratios, low supply, and continued fund inflows are creating some strength in the municipal market.

Richard Taormina, portfolio manager and head of tax aware strategies at JPMorgan Asset Management talks about the effects COVID-19 is having on credits in the municipal bond market and why crossover buyers think this an attractive asset class. Chip Barnett hosts.

Even with the news that New York City is looking to potentially borrow $7B through its Transitional Finance Authority as it faces $9B in lower revenues, the market didn’t blink and TFAs traded firmer.

Credit concern is being lost somewhat in pricing munis and traders said they are looking for alternative benchmarks, even turning to corporates and U.S. Treasuries to price the market.

The primary supply for the holiday-shortened week is projected to dip to just over $4 billion, with a mix of tax-exempt and taxable issuance led by Colorado’s $500 million of certificates of participation.

Taxable equivalent yields on exempts are close to converging into taxables.

Municipal to U.S. Treasury ratios were attractive, especially on the short end, which drove secondary yields lower.