Monday, Apr. 6, 2015

Municipal Bond Market
Munis are quiet this morning after an extremely light trading day Thursday ahead of the holiday weekend.  We expect to see the majority of this week’s attention on the primary market with any left over money flowing into the secondary.  The new issue calendar is slightly below average with $6.7bln on tap versus $8.5bln last week.   30-day supply is slightly higher with $10.07bln scheduled versus $9.25bln last week. 

Muni funds reported outflows for the first time this year with $300mln flowing out of funds.  Accounts seem hesitant to put cash to work over uncertainty about how much money they will need to raise during tax season.

PR benchmarks GOs were unchanged on the day. Bonds continue to trade around $82.00 (10.10%) after trading as high as $86.625 (9.56%) in mid-March.  The focus seems to be on PREPA lately after receiving a $2bln cash infusion from members of the forbearance agreement.  PREPA debt traded up to the high $50’s on extremely light volume due to the holiday weekend.  The investment is definitely a credit positive even for PREPA. However, we won’t see the true impact on price until later today. 

30-Day Visible Supply: $ 10.07bln

New Issue:
841mln     North Texas Toll Roads     A3/BBB+
690mln     NYS Dorms, NYU     Aa3/AA-
244mln     California State Public Works     A1/A

UST 10yr 1.906%