Securitization

Issuers have increased their debt sale in recent weeks, as issuance has come in above $70 billion year-to-date, according to LSEG data

High-yield and taxable munis continue to outperform, supply grows but concentrates in larger deals led by $3 billion of state personal income tax revenue bonds from the Dormitory Authority of the State of New York next week.

The market is being led more by supply and demand than ratios or even rates. As ratios sit at extremely tight levels, there are buyers engaging at these levels, but large amounts of cash continue to sit on the sidelines.

It was a good day for munis with larger deals clearing the primary and secondary trading showing a more constructive tone with triple-A yields falling a few basis points amid a stronger session for all markets.

Large deals were repriced to lower yields while the secondary market was lightly traded, leading to little changed triple-A yield curves and underperformance to Treasury market gains. Despite a growing calendar, the supply demand imbalance remains with much cash on the sidelines.

The muni market "exhibited similar themes from the past few weeks as extremely rich valuations and the upcoming unfavorable supply/demand picture have led to a measured buyer base," said Birch Creek Capital strategists in a report.

The negotiated calendar is led by the Regents of the University of California with nearly $1 billion of general revenue bonds.

The new guidance modifies rules that stretch back to 2005.

Municipals look poised to close out February a touch in the black following a more constructive tone Thursday after being in a 'holding pattern' for much of the past two weeks.

Issuance is already slated to be healthy next week, with some large deals on the calendar.