Municipal market update

The AAA MMD scale was unchanged Tuesday and Wednesday, bumped 1 bp from 2027-2036 on Thursday after supportive PPI and jobs data, and finished Friday with a 1 bp bump in 2028. Treasuries rallied midweek as PPI reinforced a more constructive rate narrative, which was partially reversed Friday, after investors parsed through weak retail sales. Municipals largely ignored Friday’s Treasury weakness, leaving ratios slightly richer, with the 10-year Municipal/Treasury ratio closing near 69% and the 30-year ratio near 85%.

This week municipal technicals remain supportive but will face the challenge of a substantial new issue calendar expected to exceed $17 billion. On the demand side, Lipper reported a decline in fund flows from $1.3billion to $758mm, however strong reinvestment needs continue to be reflected in robust SMA participation.

Cabrera will serve as Co-Manager on New York City Transitional Finance Authority’s $1.5 billion Future Tax Secured Subordinate Bonds and Dallas Independent School District Public Facility Corporation’s $129.2 million Lease Revenue Bonds, and as Sole Manager on Montebello Public Financing Authority’s $41.7 million Lease Revenue Refunding Bonds. The upcoming negotiated calendar is led by several large transportation, airport, utility, and education credits. The three largest transactions of this week include the following:

• $2.7 billion Department of Airports of the City of Los Angeles Senior Revenue and Refunding Revenue Bonds (AMT / Non-AMT)

• $1.5 billion New York City Transitional Finance Authority Future Tax Secured Subordinate Bonds (Tax-Exempt)

• $1.3 billion Energy Southeast, a Cooperative District Energy Supply Revenue Bonds