Monday, April 4, 2016

Municipal Bond Market
Munis are unchanged this morning after an extremely quiet trading day on Friday.  Muni funds continue to face inflows with $783mln in new cash versus $900mln last week.  The market continues to struggle to put money to work with very few options in the secondary and huge demand for the primary.  New Issuance will hit $7.7bn versus $6.1bn last week.  Highlights of this week’s calendar include $912mln from Baylor Scott and White Health system, $842mln from the University of California, and $300mln from the University of Connecticut.  30-day supply is weaker this morning with $9.6bn scheduled over the next 30 days versus $8.6bn Friday.

PR trading remains light as the market prepares for potential defaults in July.  Benchmark GO 8s of 2035 continue to fade with bonds trading @ 68.625 (12.28%), after trading around $71 two weeks ago.   We don’t expect to see much direction out of PR across all debt sectors over the next few months, liquidity should be scarce with so much uncertainty over the next few months. 


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