Primary bond market

Investors are sending the message that higher-grade, longer-term issuers will fare far better than lower-rated, higher-yield ones amid a focus on credit.

A pre-pricing wire will be discussed by the state, its syndicate, and advisors early Wednesday ahead of a decision on whether to launch the deal or remain on the day-to-day calendar.

The short end of the municipal curve again saw yields fall, but that didn't impede the productivity of the day's new-issue market.

The Fed on Monday essentially said it was standing 10 feet back from the market, allowing it to manage the pandemic-driven crisis itself. Lower-rated issuers may benefit most from the facility.

High-grade trading Friday showed the disparate credit picture that investors are facing; they now need to dig deeper into municipal financials and the backstops on certain bonds.

In the midst of issuer credit deterioration due to coronavirus, muni yields fell and new-deals were priced on the heels of California's $54 billion deficit news.

Primary deals are now coming at tighter spreads to the secondary than they have recently. Cooler heads are appearing on the institutional side, but ICI reports $1.7 billion pulled from muni market mutual funds.

The lowest-rated state government moved a $1.2 billion GO certificate deal to the day-to-day calendar in the face of a skeptical buyside.

Two credits struggling with coronavirus-driven revenue shortfalls experienced very different outcomes in Tuesday's market. Taxable Penn State bonds showed the appetite for taxable munis is real.

A premarketing wire indicated the deal could price at spreads 300 basis points north of benchmark yields. In Monday's trade, the rally begun last week continued.

Taxable munis hold the distinction as being the largest positive sector year-to-date, up 2.81%. High-yield has been hammered, losing 10%.

A range of technical issues — from month-end accounting and financing to spread widening, price volatility and the coronavirus impact on businesses and the economy — spurred a tone of relative quiet in Thursday's trade.

April finished with $23.7 billion of issuance, a 15% decline from the $27.9 billion in April 2019. Volatility from the pandemic has caused erratic swings in benchmark yields, resulting in the lowest muni volume total in the month since 2011.

William Sims, managing principal, and Jim Bodine, executive vice president, of Herbert J. Sims & Co., offer some perspective and proportion around the impact of COVID-19 on the senior living industry and associated investments.

The primary, meanwhile, digested a massive $1.12 billion bond offering from New York Power Authority. The entire deal was structured to mature later than 2045 and a good portion of it was designated green bonds.

The market isn't facing 50-basis-point swings, but its footing is still off as participants grapple with the long-term effects of the pandemic. New deals are getting pulled and New York Power is about to issue bonds maturing in 2060.

Illinois tentatively plans to sell $1.2 billion of certificates next week and $1 billion of bonds the following week.

The utility envisions a digital power grid and clean energy transmission, with this sale setting the stage.

Issuers bringing taxable deals this week should see robust buying interest as the strong performance of the corporate market has pushed yields down, making double-A taxable municipal bond yields attractive for corporate investors in the 21% tax bracket.

The system's offering statement presents a detailed picture of the pandemic's impact so far.