Public finance

A change by the IRS increases the Permanent School Fund's capacity by nearly 86%, allowing its triple-A school bond guarantee to be widely available again.

Investors will be greeted Monday with a new-issue calendar estimated at $6.018 billion with a few bellwether, triple-A names coming from Loudoun County, Virginia, Frederick County, Maryland, and Columbia University with sizable deals.

The U.S. Supreme Court ruled against a journalist group seeking the release of a wide range of Puerto Rico Oversight Board information, which may have had an impact on the PREPA bankruptcy proceedings.

Banks reduced their quarterly muni holdings during the first quarter at the fastest rate in 20 years, per Municipal Market Analytics.

"We are seeing strength in the securities, transportation and warehousing and office sectors," New York State Comptroller Thomas DiNapoli said "but retail, restaurants, construction and tourism continue to lag the national recovery."

A proposed IRS regulation boosts the amount of bonds that can be guaranteed by nearly 86% to about $218 billion.

The measure, which passed both legislative chambers in lopsided votes, would strip the governor of his sole ability to appoint turnpike board members.

Fitch said its upgrade of Kentucky's IDR "reflects material improvements to Kentucky's fiscal reserves since 2020 as a result of improved budgetary discipline.

"Our ratings reflect the progress the city has made over time on important issues like rebuilding reserves and improving the health of our pension fund," said Philadelphia Treasurer Jackie Dunn.

The Federal Reserve meeting May 2-3 will be closely watched for hints about what the FOMC's next move is. Join BNP Pariba U.S. Economist Yelena Shulyatyeva at 11 a.m. May 4 as she takes a look at the meeting and Chair Powell's press conference.

Outflows were seen again from municipal bond mutual funds, though they lessened this week as Refinitiv Lipper reported $101.664 million was pulled as of Wednesday.  

"This is a historic accomplishment — setting new records for the largest single-month revenue and personal income tax collections in state history," said Gov. Jim Justice.

One analyst says the final figure will be closer to the Puerto Rico Oversight Board's estimate than the bondholders'.

The CPI numbers coming in pretty much as expected "was a relief" to the markets, with the bond market rallying after the release, said Luke Bartholomew, senior economist at abrdn.

The Securities and Exchange Commission will be issuing two different rulemaking proposals to address the controversial Financial Data Transparency Act.

"This recent escalation of the Disney-DeSantis fight is unnerving, but it doesn't make that fight any more consequential for the municipal market," said Justin Marlowe of the University of Chicago.

Fiscal '24's capital financing program leans on a mix of state and federal debt and over $900 million in bonds.

Despite the attraction for new issues, sources said there is still uncertainty overall in the municipal market stemming from the regional banking crisis.

The repercussions of the train derailment in Ohio are a rallying cry for regulation.

Without a consensual plan, the bankruptcy could be dismissed.