Refunding bonds

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

The UC Regents will close the books on its $1.1 billion refunding deal that included the refunding BABs Wednesday. Investors do not appear to be penalizing the issuer in secondary trading as spreads have stayed at or near the original pricing.

The Washington refunding deal is built on an extraordinary optional redemption of Build America Bonds despite criticism from investors who hold them.

The extraordinary redemptions being used to call Build America Bonds "are based on a creative but flawed legal argument driven by the current change in interest rates," said Kramer Levin partner Amy Caton.

Market participants said it is yet to be seen whether issuers will pull back their BABs refundings due to concerns after several bondholders sent a letter to the trustee on a Regents of the University of California deal, saying it was "prohibited" from executing the redemption.

The Chicago Park District Board of Commissioners unanimously approved three ordinances laying the groundwork for up to $37 million new money bonds and a tender.

Most tax-exempt tenders saw low participation, which is good news to the taxpayers. The poorer the participation in the tender, the less is the waste from these premature refundings prior to the call date.

Issuance for the month is slightly above the $27.666 billion 10-year average, according to LSEG Refinitiv data.

The trend toward paying down debt, as opposed to tender offers or refundings, to save money cuts across Red state/Blue state lines. New Jersey retired $500 million of debt to produce $160 million of savings.

The state of Wisconsin is embarking on a flurry of debt-related activity as the year begins, with a cash defeasance and three refunding deals on the table.