Monday, Apr. 13, 2015

Municipal Bond Market
Munis are slightly weaker this morning after a quiet end to the week.  Secondary volume was extremely light again with the majority of buyers sitting on the sidelines ahead of this week’s new issuance. This week’s calendar is expected to be about $8.8bln versus $6.51bln last week.   The primary market will be highlighted by ten deals greater than $200mln, including $750mln from the Port Authority of NY & NJ, $650mln NYC TFAs, and $360mln from the University of Pennsylvania health system.   30-day supply saw a slight decrease to $11.8bln from yesterday with a jump to $12.6bln Friday.

Muni funds saw outflows for the second straight week with $32mln in redemptions versus $301mln in redemptions last week.  We continue to see buyers sitting on the sidelines due to uncertainty over tax season.  Redemptions mixed with low demand could put some pressure on this week’s primary calendar.

PR benchmarks GOs were unchanged as PREPA bonds rallied to end the week.  GOs continue to trade in the low $80.00s (10.10%) after trading as high as $86.625 (9.56%) in mid-March. 5000m+ bonds traded yesterday @ $81.25 (10.20%).  We should see benchmark GOs remain in this range until we get more clarity on the pricing of the new deal.

PREPA debt jumped Friday as the market began to feel more confident about the potential $2bln PREPA cash infusion. 2500m PREPA 5.25s of 2040 traded @ $66.25F Friday after trading in the low $60s earlier in the week.  

30-Day visible supply: $ 11.8bln

Deals we will be bidding:
$650,000     NYC Transitional Finace Authority     2017-2042
$250,000     Boulder Valley School District, CA     2016-2044     Aa1/AAA
$65,485     Virginia G.O.s     2016-2035     Aaa/AAA
$214,980     Virginia G.O.s Refunding     2018-2027     Aaa/AAA