Taxable bonds

A decades-old policy position on taxable debt and recommendations for issuance of variable-rate debt were among the issues taken up by the GFOA's debt committee.

Municipals posted gains for the first time in 2022 in May, outperforming U.S. Treasuries on the month. The Bloomberg Muni Index posted a 1.49% return in May bringing losses down to 7.47% year to date.

Total May volume was $31.167 billion in 750 deals versus $35.358 billion in 1,295 issues a year earlier. In a continuing trend, new-money issuance was up 14.2% in May year-over-year.

Panelists at the NFMA 2022 annual conference said they aren’t holding out for advance refunding to be reinstated anytime soon.

Assuming the taxable and tax-exempt rates are highly correlated (and in fact they are), we can show that the expected cost of a fairly priced callable bond exceeds that of an optionless bond.

New York Dormitory Authority school bonds and Northwell Health priced and upsized, while Wisconsin and Oregon offered general obligation bonds. Analysts say municipal curves are oversold, creating a buying opportunity.

Despite outsized volatility and liquidity challenges ahead, the possibility of relief for munis is not too far off, analysts say, but USTs lead the way for exempts.

The Texas Natural Gas Securitization Finance Corporation picked a team of underwriters to sell debt for utilities hit hard during 2021’s Winter Storm Uri.

Municipal returns in April were deeply negative, bringing the year-to-date figure to near 9% losses, the largest posted on the Bloomberg Muni Index since its inception in the 1980s.

A taxable bond issue will raise $3.4 billion for extraordinary costs incurred by natural gas utilities during deadly Winter Storm Uri that hit Texas in 2021.