Taxable bonds

The Thanksgiving holiday-shortened week, next-to-no supply and few economic data releases should keep munis steady.

The speculative grade bond sale is part of the financial process of returning the Phoenix-based university to nonprofit status after years as a for-profit.

Investors put nearly $2 billion into municipal bond mutual funds for the most recent week with high-yield reversing a downward course to hit $1.2 billion following just $1 million a week prior.

A lighter, $5 billion calendar, heavy on healthcare, kicks off November. Most participants agree volatility in U.S. Treasuries will be a leading factor for municipal market performance. Uncertainty in Washington also isn't helping the asset class.

October has, on average, been the heaviest new-issue month of the year. Analysts said the lower volume, particularly taxables, was led by many issuers sitting on the sidelines, waiting for a potential package from Washington, D.C.

Seventy-seven percent of respondents to a Bond Buyer survey said there should be universal ESG standards and just over half said ESG is “critical” or “very important." Consensus on how to and who should create such a language is less clear.

The lion's share of the deal is taxable, with a $20 million tax-exempt new money series; proceeds from the taxables will refund outstanding debt.

The increase in yields and spread widening across municipal sectors has given some pause to high-yield investors after months of stagnation.

Municipals took a breather Monday, largely ignoring stock market volatility and softer U.S. Treasuries, ahead of a solid $9 billion new-issue week.

September issuance was down more than 32% from the same month in 2020; total issuance so far this year is at $346.48 billion, down 2.4% compared to last year.

The high-grade muni scales saw cuts of up to four basis points in a continued selloff Monday as the market faces a robust slate of new issues.

Month-to-date returns for municipals are in the red with the Bloomberg Fixed Income Indices municipal index returning -0.12%, high-yield at -0.15% and taxables at -0.32%.

Municipals continue to stay in their own lane. ICI reported $1.4 billion of inflows in the 28th consecutive week.

Several strategists estimate the municipal market will be 50% taxable in five years if a direct-pay bond option makes its way into law.

Ridership on the RTA's three service boards remains sharply below pre-pandemic levels but it benefits from coronavirus relief and stellar sales tax performance.

Market participants welcomed the municipal-related provisions in the reconciliation bill but are hesitant to start making bets on its passage.

Cheered by the inclusion of key muni market priorities in tax legislation unveiled over the weekend, muni market advocates must now battle to keep them there.

Boston-based Breckinridge will partner with Harrington Cooper to specialize in investment grade fixed-income and ESG integration for investors in the UK, Ireland, Continental Europe and Japan.

The taxable deal from Georgia's largest not-for-profit health system offers investors three index-eligible bullet maturities in 10, 20 and 30 years.

The nearly 40% year-over-year decrease is a result of various factors including rising interest rates, other financing tools, such as forward delivery bonds, and simply that refundings are in less demand from issuers.