Primary bond market

Chicago released a request for qualifications for underwriting services on April 30, seeking to form new pools from which to choose firms to handle their bond sales.

"In our view, the worst for munis is behind us, at least for now; tax-exempts might continue to outperform, but only to a degree as technicals will remain somewhat challenging," Barclays strategists said.

The recent firmness in the market has been "much appreciated," said Shannon Rinehart, senior portfolio manager of municipal debt at Columbia Threadneedle Investments.

The third-most-populous Louisiana city is closing out a 2021 bond authorization, but has plenty left from a 2024 bond referendum.

Charlotte will sell $330 million of bonds and Duke Health will offer $540 million.

Muni yields remain attractive, said Tom Kozlik, managing director, head of public policy and municipal strategy at HilltopSecurities.

Harvard University's ongoing legal battles and the return to market by Chicago's Regional Transportation Authority lead a host of municipal topics in April.

Focus was on the primary market last week, with Birch Creek reporting that one dealer estimated that 90% of the focus earlier in the week was on new issues.

"For munis, a strong jobs report should reverse recent credit spread widening, while a weak jobs report should keep credit spreads around current levels," said BofA strategists.

Compensation played a role in the departures, sources said.

Some of the issuance stems from project finance largely "drying up" because of where rates are, said Jennifer Johnston, senior vice president and director of research, municipal bonds, for Franklin Templeton Fixed Income. 

The $350 million revenue bond issue will refund bonds sold in 2015 and finance improvements to the airline's primary maintenance facility in Tulsa, Oklahoma.

The $500 million deal was delayed after the tariff announcement rocked the markets. It has priced, but offering documents include new trade war disclosures.

The market has seen seven consecutive weeks of outflows. "This is not surprising given that retail investors tend to follow performance," said Daryl Clements of AllianceBernstein.

The coming fiscal year will have more than 10 times the state bonding as the current fiscal year.

"Easing tariffs, a slowing economy and an improved supply/demand outlook for munis in May and onward should drive muni market pricing going forward," BofA strategists said.

Investors pulled $397.4 million from municipal bond mutual funds in the week ended Wednesday, following $1.258 billion of outflows the prior week.

The commission also approved converting a GO bond sale from competitive to negotiated.

The market is still in a negative technical period, said Chris Eustance, a portfolio manager at Morgan Stanley Investment Management.

Muni yields may "continue to stay elevated due to supply and demand factors," rather than concerns over credit quality, said Cooper Howard, a fixed income strategist at Charles Schwab.