Primary bond market

S&P's outlook revision to positive means there is a one-in-three chance the state could have its AA-plus rating upgraded to AAA over the next two years.

The top two municipal bond insurers wrapped $31.845 billion in 2023, up 10.4% from the $28.847 billion of deals in 2022, according to Refinitiv data.

The December consumer price index came in slightly stronger than expected, perhaps eliminating the possibility of a rate cut in March, analysts said.

There were several ways Adaje could integrate ficc.ai's offerings into its system, the most impactful would be tender offering analyses, said Dan Silva, Adaje CEO.

"It is a torpedo into one of the safest, most secure pension systems in the United States, if not the world," said North Carolina Treasurer Dale Folwell.

The one-year was cut up to eight basis points, depending on the scale.

Lansing's Board of Water and Light is issuing $350 million of tax-exempt bonds in a deal that would fund a tender offer for $232.6 million of outstanding debt.

The offered curve is "still deeply overbought" at all maturities outside of one year, which is "a signal for issuers and sellers to become aggressive," said Matt Fabian, a partner at Municipal Market Analytics.

Since November, 10-year munis have fallen 130 basis points, according to Refinitiv MMD. This has pushed ratios to near-record lows, said Jason Wong, vice president of municipals at AmeriVet Securities.

The Alameda Corridor Transportation Authority announced a tender offer as part of a restructuring plan that could culminate in $1.36 billion of bonds.

The state of Illinois is preparing to issue $600 million in new Build Illinois junior sales tax revenue bonds next week.

After this week's sale, the state intends to issue another series of refunding bonds in February in connection with a potential tender offer for taxable GOs and a current refunding of some tax-exempt GOs.

Despite the outperformance this week, and while the asset class had "a stellar December, which rounded out a very solid year," Barclays PLC strategists said the high-grade muni market has become "quite rich."

The muni market enters this year from a relative position of strength, said Jeff Lipton, managing director and head of municipal research and strategy at Oppenheimer.

This year has favorable potential for 1Q activity, noting an unusually large scheduled reinvestment potential in January and February, including $19 billion of maturities plus calls in January and $24.9 billion in February, noted MMA's Matt Fabian.

"Buyers went all in on revenue-sector names, with that category earning 6.8% and beating out GOs by 127 basis points," said FHN Financial's Kim Olsan. "Sub-sectors within the revenue category pointed to a risk-on theme into year-end." 

This performance is a dramatic rebound from 2022's losses.

The muni market saw $379.992 billion of debt issued in 2023, only $11.076 billion less than the lackluster $391.068 billion seen in 2022.

LSEG Lipper reported Thursday that investors pulled $463.7 million from muni mutual funds for the week ending Wednesday after inflows of $147 million the week prior.

Participants are mixed on whether there will be continued growth in 2024, but some still see a universe of taxable bonds that still can be tendered.