Securitization

The tax-exempt market is expected to be "biased higher" in the coming weeks and months as the expected heavy pace of issuance this month will not be as "oppressive" as feared, said Pat Luby, head of municipal strategy at CreditSights.

Demand may strengthen as "investors anticipate the Federal Reserve's likely path of rate cuts, which would drive yields even lower," said Tom Kozlik, managing director and head of public policy and municipal strategy at HilltopSecurities.

"The story remains the same: solid demand is more than enough to take down the sizable new issue supply," said Daryl Clements, a portfolio manager at AllianceBernstein.

Its triple-A bonds have recovered after cheapening earlier this year under a pressure campaign from the Trump administration.

The new-issue calendar is at $15.637 billion and boasts four mega deals.

Earlier Thursday, the market was "chugging along, doing OK, just kind of nothing, in between slight strength to modest upticks, but the narrative changed when that bank news came out. The market really ran pretty quickly," said Chris Brigati, managing director and CIO at SWBC.

"In theory at least, municipal yields should be able to stabilize here; levels remain attractive for pure income buyers while more sustainable constructive fund inflows are just enough to speak for rising issuance in the absence of meaningful reinvestment," said Matt Fabian, president of Municipal Market Analytics.

The financing challenges facing both Brightline projects have translated into falling bond prices.

Investors sued after the fund's sudden June selloff.

As the technical picture tends to turn "more favorable" during November and December, Birch Creek strategists believe "the wider new issue concessions brought about via the heavy new issue calendar will likely be rewarded."