Primary bond market

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.

The mass transit system still holds a strong presence despite three bond rating downgrades amid the coronavirus, Chief Financial Officer Robert Foran said.

The front of the municipal yield curve is 'astounding' and traders said dealers are uncharacteristically accepting the levels, likely due to the historically attractive ratios.

The Evanston, Illinois-based university will offer $300 million of taxable debt as soon as Wednesday after losing its gilt-edged rating status.

The primary was up and running Monday with Connecticut’s $850M offering for retail while many Texas issuers were active on the heels of the Fed news that it is open for business for munis.

The Federal Reserve opened the door to participating in a competitive bidding process for short-term notes, a requirement in Illinois law.

The system is managing the pandemic's impact on its campuses and hospitals, as well as a drop in the price of oil, which supports it financially. Neither situation is expected to shake its rating strength.

Uncertainty and volatility have caused a bifurcated market when it comes to credit, and widespread disparity between high-quality and high-yield is complicating matters for issuers.

The offering of special tax obligation bonds comes as the state begins a four-phase reopening in its next response to the coronavirus.

Yields on all triple-A benchmark curves out to nine years are now below 1%. The largest bumps were again on the very short end of the curve. Lipper reported $580 million of inflows.

Investors scooped up Illinois’ $800 million deal as the state dug deep into its pockets .