Taxable bonds

After one of the worst sell-offs in municipal market history as COVID-19 began its rampage in March, the market rebounded to set the all-time record.

A record year of overall issuance, led by a boom in taxables, tells the story of a growing muni market with a broader, more diverse investor base.

Paltry supply will force the secondary to handle the rest of 2020; New York City taxable general obligation bonds trade up by nearly 20 basis points on intermediate bonds.

The entire municipal exempt yield curve is seeing consolidation with a 125 basis point spread between one and 30 years, and sub-1% yields are holding firm inside of 15 years.

This was the inaugural issuance under the “No Place Like Home” program, the first large municipal bond program created to invest in homeless housing infrastructure and secured directly by taxes on high-income residents.

ICI reported another $2.3 billion of inflows, new deals continue the march to lower yields and benchmarks rose a basis point seven years and out for the first time since the beginning of December.

Even with COVID-19-related shutdowns — a New York City lockdown may be imminent — issuers are pricing bonds into an extremely low-rate environment.

The LBJ Infrastructure Group, operator of managed lanes on a Dallas highway, will sell $1.2 billion of bonds through a conduit issuer.

Munis firmed Friday, only the second time in December they weren't flat, and more than a few participants are waiting on yields to rise before getting involved, particularly given the rich muni/treasury ratios and low absolute yields.

Bid list volume is trending higher into the end of the year, but its share as measured against overall high demand does not pose much of a threat, analysts say. Refinitiv Lipper reports $992 million of inflows.

COVID-19 brought the primary to a standstill in March and April. The municipal market is now set to eclipse $450 billion of issuance in 2020, a record.

Munis are likely to lag Treasuries in some fashion once year-end empathy settles in mid-month and ratios become a factor.

Long-term municipal bond volume is on pace to set a new record of yearly issuance, thanks in part to issuers rushing to market before the election and a continued taxable boom.

The election results will be the most important effect on the municipal market for the next six months, S&P Live Market Survey says.

"We have no need for cash-flow relief or restructuring," said the treasurer of Dallas Area Rapid Transit, which continues to expand its rail services.

The No Place Like Home bonds, backed by a long-standing income tax surcharge, fund supportive housing for homeless people with mental health issues.

Arizona-based Banner Health adds another hospital to its system as it offers investors $607.6 million of taxable revenue bonds.

The municipal market's volume registered its fourth consecutive month of greater-than-$40 billion and the largest on record total for the month of September.

Atlanta airport bonds and a Puerto Rico housing issuer were some new offerings of note on Tuesday.

In taking advantage of historically low taxable municipal bond rates, Florida's deal should be attractive for yield-starved investors, state official says.