Secondary bond market

Secondary market trading showed yields rising slightly, but the primary market again showed signs of life, as demand for the asset class seems to be gaining ground.

A stratified credit differentiation can be expected to linger for the foreseeable future until revenue streams in sales-tax and other project-backed bonds are more fully restored. Pension obligation bonds are back in California.

While many new-issues are still on the day-to-day calendar for next week, more are being slated to price on specific days, signaling that dealers and issuers are ready to again test the primary.

The secondary market took a backseat to the primary Thursday with yields holding steady while Lipper reported $833 million of inflows, the first since February 26.

Michael Rowan, CFA, managing director of global public, project and infrastructure finance at Moody’s Investors Service, talks about how COVID-19 is affecting the rating process. John Hallacy hosts.

ICI reported nearly $3 billion of outflows, which is foretelling that coronavirus-driven volatility still lingers even if the muni market has rallied by at least 60 basis points since early-April high yields.

Starting on March 10, ETF prices consistently diverged from benchmark indices and were underpriced for about 10 trading days before converging again.

Technical and fundamental concerns surrounding credit and supply could present challenges for the market going forward but participants tepidly welcomed signs of stability.

Due to the coronavirus, a plant in Indiana may not be able to make its bond payments.

Confidence in the municipal market among participants has been boosted by the Fed purchase program, but some expect that if equities dive amid more coronavirus fears or re-test March lows, munis could be rattled once again.