Primary bond market

This week's deal will fund accelerated pension payments and Rebuild Illinois expenditures. A $250 million piece will be taxable.

A supply surge hits the market as The Bond Buyer 30-day visible bond volume ticks in at $17.67 billion, $10 billion of which will come the first full week of May, just as macroeconomic data moves all markets to rally.

Assured's controlling vote is "important to investors who were reassured to hear that there would be a large sophisticated party with a significant economic interest in the success of the project," the insurer said.

The "historical runway" heading into Memorial Day is favorable, rolling into the summer redemption months of June through August, said James Pruskowski, chief investment officer at 16Rock Asset Management.

Healthcare issuance is up 122.2% year-over-year through April, rising to $9.062 billion through the first four months of 2024 from $4.078 billion over the same time period in 2023, LSEG data shows.

Issuance has increased, but financial performance and ratings are likely to stay volatile.

Munis posted losses in April, returning negative 1.24%. The asset class is also seeing losses of 1.62% year-to-date.

The deal, originally planned at $1.5 billion in three maturities, was downsized and restructured and then restructured again into one 10-year bullet maturity.

While munis were steady Tuesday, yields have risen over the past several weeks as "larger supply is part of a strong [year-to-date] trend for tax-exempts," said Matt Fabian, a partner at Municipal Market Analytics.

Preliminary issuance figures for April are at $39.39 billion, up 18% from April 2023.

"Bond market investors are all wishing that April was behind us as they are anxious to hear the Fed's statement at its next FOMC meeting," noted BofA Global Research. "The statement should be no surprise as the market consensus has converged to 'higher for longer' rates.

Inflows returned to muni mutual funds as investors added $200.3 million for the week ending Wednesday after $1.474 billion of outflows, according to LSEG Lipper.

It's a big week for the Fortress-backed train company, which refinanced more than $4 billion of debt and broke ground on its West Coast high-speed line.

"Just like the ATM became an additional transaction channel in the banking industry, I believe distributed ledger technology will provide municipal issuers with a similarly valued tool to sell their bonds," said Rick Coscia, Quincy's Strategic Asset Manager.

The "impressive" investor appetite for tax-exempts has been "holding steady all quarter despite expensive valuations, supply surges and periods of low reinvestment demand," said GW&K Investment Management strategists in a report.

"Bifurcated demand reflects the persistent bid strength from [separately managed accounts] and retail investors, not to mention more accounts marshaling cash and liquidity up front while the Fed perspective evolves," said MMA's Matt Fabian.

The trio have decades of experience in high yield and investment grade portfolios and will launch new high-yield investment strategies and vehicles for Rockefeller.

The new-issue calendar will be a "good test to see if the higher absolute yields can pull buyers off the sidelines or if underwriters need to widen spreads significantly enough to reprice the entire market to clear the deals," according to Birch Creek strategists.

A combination of a "stronger-than-expected economy, higher Treasury rates, robust supply, and rich valuations resulting in choppy markets" have made the trading environment in H124 "quite difficult," according to Barclays.

Friday price talk for the unrated tax-exempt paper was between 11% and 15%.