Monday, Apr. 20, 2015

Municipal Bond Market
Munis are slightly weaker this morning after an extremely quiet trading day Friday. The new issue calendar is about $8.7bln versus $7.9bln last week which is right around the weekly average for the year of $8.5bln.  First quarter new issuance was up 59% compared to last year as municipalities continue to refund prior deals.  30-day supply is mostly unchanged this morning with $11.87bln on tap compared to $11.7bln Friday.

One of the week’s more interesting deals will be the pricing of $300mln Chicago Board of Ed bonds.   The deal has been delayed multiple times over the past month as the municipality continues to face a variety of issues.   We expect to see a decent amount of demand for the deal as it provides one of the few sources of yield in this week’s primary calendar.  15-year Board of Ed paper traded +300bps as of Friday.

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.

PR benchmark GOs remained unchanged on Friday on average volume. GOs continue to trade in the low $80.00s (10.34%) after trading as high as $86.625 (9.56%) in mid-March. Yesterday’s largest trade in the name was 5000m bonds @ 80.25 (10.34%).  Trading in PR has been extremely quiet ahead of PREPAs July   $400mln principle and interest payment. PREPA debt has been unchanged since the authority agreed to a 15 day extension with creditors.

30 Day visible supply: $ 11.87bln

Notable Deals for the week ahead:
$887,580     Energy Northwest     Aa1/AA-
$391,340     Phoenix Civic Improvement Bonds     2017-2041     Aa3/AA+
$348,390     Miami-Dade County, Fl G.O.s     2016-2033     Aa2/AA