Securitization

The uptick in supply amid tax season has led to a short-end correction and higher muni to UST short ratios, but the levels are still rather rich from a historical perspective.

LSEG Lipper reported fund inflows of $447 million while high-yield muni bond funds saw another round of inflows at $246 million, marking the 12th consecutive week of positive flows in that space.

Most of the selling during tax season happens on the front end of the curve, said Wesly Pate, senior portfolio manager at Income Research + Management.

Absolute yields "remain attractive in the context of the trading range over the past three years and our longer-term projections for lower rates this year," according to J.P. Morgan strategists.

The onslaught of new-issuance and approaching month- and quarter-end led triple-A yields to rise up to seven basis points on the short end and as much as three to five elsewhere along the curve, despite stronger U.S. Treasuries. Short ratios rose as a result.

This week's new-issue calendar grows and includes some "common benchmark names like CA GO, NYC GO, and WA GO," Birch Creek strategists said.

The calendar is led by several high-profile deals, including $2.7 billion of GOs from California, $1.5 billion from New York City and $1.1 billion from Washington. High-yield gets another dose of unrated project finance debt from Miami Worldcenter Project tax increment revenue bonds. The Bond Buyer 30-day visible supply sits at $12.06 billion.

Hallam will handle high-yield muni sales and trading, focusing on large institutional accounts at the firm.

LSEG Lipper reported fund inflows of $63.8 million for the week ending Wednesday following $300.5 million of inflows the prior week. High-yield saw its 11th consecutive week of inflows at $180.4 million, down from $278.6 million the week prior.

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.