Friday, Apr. 24, 2015

Municipal Bond Market
Munis are unchanged this morning after an extremely quiet trading day yesterday.  The focus will be on the secondary today with almost all of this week’s deals already priced.   The primary market is extremely light next week with close to $4bln on tap; this would be the smallest non-holiday week of new issuance this year.   We should finally see a week dominated by secondary trading due to the combination of inflows and a light calendar.  30-day dropped to $6.8bln from about $8bln yesterday.

Muni funds recorded $534mln in inflows after three straight weeks of outflows.  The majority of cash flowed into HY funds with $374.2mln in new cash.  We continue to see institutional buyers searching for yield with huge demand for tobacco bonds in the secondary and an oversubscribed Chicago BOE deal this week.

PR benchmarks GOs were unchanged again. GOs continue to trade in the high $70.00s (10.40) to 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 (10.348%).  We expect GOs to remain in this range until with get more clarity on both PREPA and the new deal. 

30-Day visible supply: $6.8bln