Taxable bonds

The increasing influence of institutional market participants is even stronger in the taxable muni sector, a Municipal Securities Rulemaking Board report finds.

The firm has brought on Kalotay Analytics' quantitative libraries to calculate certain metrics, including average life dates and cash-flow yields for taxable term bonds.

Effective spread data yielded interesting results about the way corporate and municipal bonds were treated by Fed backstop programs.

That expansion wholly depends on Washington actually bringing back the taxable product and making it permanent, a diminishing scenario in 2021.

Muni participants await a new month with growing issuance, but perhaps not quite enough as issuers are hesitant to add more debt before final word from Washington on infrastructure.

The IRS is seeking comments on a change that may benefit many issuers.

Whether a BABs-like program could make it into actual law in Washington is still highly uncertain. What is certain: Some form of infrastructure spending is must-pass legislation because federal-aid highway funding is set to expire in October.

Issuers should recognize their ability to prepay debt is an extremely important term, and they should consult with their MAs to achieve the most liberal prepayment term consistent with the type of financing they are doing.

While June was lower than 2020 in par, pandemic-related factors skewed last year's issuance totals, making the $42 billion issued this month high on a historical basis. Outside factors, such as federal aid and potential infrastructure plans, may affect issuance going forward.

A total of $14.8 billion of par has been wrapped by bond insurance through May of this year, compared to $9.76 billion through the end of May 2020.