Friday, Apr. 17, 2015

Municipal Bond Market
Munis are slightly stronger this morning after another mixed trading day.  New issue is nonexistent today as all notable deals for the week have been priced.  We should finally see some attention on the secondary market after buyers spent the majority of the week awaiting allocations on new deals.    30-day supply is mostly unchanged this morning with $11.81bln on tap compared to $11.4bln yesterday.

Muni funds reported net out flows for the third straight week with $613mln outflows versus $32mln last week.  We continue to see hesitance out of buyers as they await possible outflows due to tax season.

In credit news, NJ GO bonds were downgraded to A2 from A1 by Moodys.  The rating agency cited lack of improvement in weak financial position and continued pension contribution shortfalls as the cause.  We expect to see selling in NJ GOs and state appropriated debt as the market reacts to the downgrade.

PR benchmarks GOs remained unchanged on Thursday on light volume. GOs continue to trade in the low $80.00s (10.10%) after trading as high as $86.625 (9.56%) in mid-March. Yesterday’s largest trade in the name was 300m bonds @ 81.50 (10.17%) versus trades of 5mm+ over the past few days. We expect benchmark GOs remain in this range until we get more clarity on the pricing of the new deal.

30-Day visible supply: $11.81bln