Primary bond market

Instead of her original proposal, Miami-Dade County Mayor Levine Cava said she will work toward crafting an even larger bonding plan that will also include money for transit projects.

Some buying returned to the market Thursday from the buy-side and asset managers as dealers attempted to sell bonds, said Chris Brigati, senior vice president and director of strategic planning and fixed income research at SWBC.

Two mega deals recently priced with make-whole calls for bonds due in 2034 and shorter where the market does not appear "to be penalizing issuers for including an optional make whole call feature in the short maturity tax-exempt bonds," said Pat Luby, head of Municipal Strategy at CreditSights, in a report.

"HB 727, if signed into law, should lower borrowing costs for Kentucky school districts and will serve as a critical tool in dealing with cost overruns and other inflationary pressures," said Compass Municipal Advisors.

"Most spots on the muni AAA HG curve are at or near year-to-date highs, and the muni HG curve showed significant underperformance across the curve in March, relative to the broader fixed income market, after sizable muni outperformance in February," said J.P. Morgan strategists.

Municipal bonds on the rise

Among the items approved by the state Local Government Commission were $750 million of affordable housing bonds, the Turnpike Authority's Thursday sale of $184 million to refund BABs and Wake County's $321 million refunding bonds.

Before Tuesday's selloff, muni yields have been rising over the last several weeks due to "outsized" new-issue supply, said Anders S. Persson, Nuveen's chief investment officer for global fixed income, and Daniel J. Close, Nuveen's head of municipals.

John Hallacy of John Hallacy Consulting and Rich Ciccarone, president emeritus of Merritt Research Services, talk with Chip Barnett about the municipal bond business over the past 40 years. They take a look back at where the industry has been, where it is and where it will be going.

The uptick in supply amid tax season has led to a short-end correction and higher muni to UST short ratios, but the levels are still rather rich from a historical perspective.

March issuance came in at $36.405 billion, above the $34.579 billion 10-year average, according to LSEG Refinitiv data. 

LSEG Lipper reported fund inflows of $447 million while high-yield muni bond funds saw another round of inflows at $246 million, marking the 12th consecutive week of positive flows in that space.

Most of the selling during tax season happens on the front end of the curve, said Wesly Pate, senior portfolio manager at Income Research + Management.

"Now that the first phase of Miami Worldcenter is complete and the second phase is underway, our team is issuing bonds backed by the TIF package, which will help defray the cost of the improvements made in the district," the development team said.

Absolute yields "remain attractive in the context of the trading range over the past three years and our longer-term projections for lower rates this year," according to J.P. Morgan strategists.

The former Citi banker earlier this month was tapped by Huntington National Bank to become the firm's head of public finance, becoming the fourth woman to ascend to the role in the municipal industry.

The onslaught of new-issuance and approaching month- and quarter-end led triple-A yields to rise up to seven basis points on the short end and as much as three to five elsewhere along the curve, despite stronger U.S. Treasuries. Short ratios rose as a result.

This week's new-issue calendar grows and includes some "common benchmark names like CA GO, NYC GO, and WA GO," Birch Creek strategists said.

Vivian Altman ascended to managing director and head of public finance at Janney Montgomery Scott in 2017, and is now one of four women leaders in the space.

The calendar is led by several high-profile deals, including $2.7 billion of GOs from California, $1.5 billion from New York City and $1.1 billion from Washington. High-yield gets another dose of unrated project finance debt from Miami Worldcenter Project tax increment revenue bonds. The Bond Buyer 30-day visible supply sits at $12.06 billion.