Sell side

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.

Citi's exit comes amid the larger trend of broker-dealers downsizing balance sheets, which can hurt secondary market liquidity, particularly in times of stress. Other market players are coming into the fold.

States' January revenues were down from a year earlier.

Laws banning banks from underwriting municipal bond deals because of their fossil fuel or firearm policies dramatically boosted underwriting spreads, a business group's study said.

BofA Securities is the latest firm to scoop up former employees from Citi, which decided to shutter its muni division late last year.

Narens' hiring complements Stifel's public finance practice and the types of deals the firm is doing, said Betsy Kiehn, managing director and head of Stifel's Municipal Capital Markets Group.

Taxable munis have returned 1.48% month to date and 0.29% year-to-date while investment-grade munis have seen 0.44% returns so far in March and 0.05% year-to-date. USTs are in the black at 1.43% so far this month but returning -1.76% year-to-date while corporate bonds are returning 1.24% in March but -0.46% year-to-date.

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.

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.

Costanzo is only the fourth woman to lead a municipal banking division. Huntington has hired Citi's entire Midwest public finance banking group, and Costanzo said the firm intends to further grow its footprint in the municipal space.

Cabrera Capital Markets is welcoming three new public finance hires who are joining the firm from UBS: Shawn Dralle, Shawnell Holman and Chris Bergstrom.

Harvard and Princeton coming to market is a "huge sign of confidence," said Clare Pickering, a Barclays strategist.

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 San Diego Community College District is among those joining the trend of buying back bonds in a tender to refund for savings.

The bank has also hired some analysts to its infrastructure group over the past several weeks as it plans to beef up its muni team.

High rates and high inflation, coupled with rich reserves, pushed off or delayed issuers coming to market in 2023, noted James Pruskowski, chief investment officer at 16Rock Asset Management.

Analysts say states can avoid short-term issues as a result of strong reserves but some may face challenges over the longer term.

Three of the hires are group heads in public sector and structured finance businesses at the firm.

Extreme weather could aggravate growing property insurance pressures on governments.

The authority is one of the few investment-grade U.S. issuers actively selling triple-tax-exempt paper.