Calendar Week of 11/01/2021

New issue activity will remain subdued over the course of the week ahead of a widely anticipated FOMC meeting starting Tuesday as participants await further guidance on government-driven measures to curb inflation and foster economic growth. While the COVID-19 case count continues to improve nationwide, severe supply chain bottlenecks coupled with lackluster employment figures have played a major factor in a challenging return to economic levels registered prior to the pandemic. The Federal Reserve is forecasted to announce the tapering of asset purchases over the course of a two day meeting as inflation figures peak to 30-year highs, causing greater concerns throughout the capital markets. As the Fed prepares to wind down the $120Bn monthly asset repurchase program launched in the beginning of 2020, participants will direct attention towards the timing of impending interest rate hikes following the recent volatility registered across US treasuries. Elevated levels of inflation has been brushed off by equities which continue to climb to record levels, prompting investors to question whether or not such momentum could be sustained into the new year. Participants continue to monitor material developments flowing from Washington as bipartisan discussions linger with no formal agreement of a national infrastructure package as the market carefully analyzes the bill for new issue volume impacts associated with further federal funding appropriated towards state and local governments. Recent upticks in rate volatility has presented windows of opportunity for select investors as MUNI/UST ratios experience larger fluctuations WoW after the 10YR ratio widened by 300bps to 77% and the 30YR ratio shifting 500bps to 88% as market activity heats up prior to year-end. Muni benchmarks faced mixed performance over the course of last week, with cuts of 1-2bps noted in the front and intermediate range of the curve paired with bumps of 3bps housed in the 30YR tenor as the market navigates cross currents stemming from higher degrees of uncertainty. While issuance over the course of October was down relative to 2020, it is important to note the flood of supply which came to market ahead of the 2020 election after muni volume peaked to record levels of $70Bn+, with last month's volume of 40Bn+ falling above the historical October average. Given the trajectory of new issue performance over the course of the past year, market players forecast yearly totals to fall slightly below last year's record level of $497Bn as state and local governments steadily address financing needs.

Investor demand for new issue paper remains intact after last week's double digit calendar of $10.1Bn presented buyside accounts an array of credits and purposes, with a large presence of tax-exempt paper geared towards retail investors. Volume registered across last week's offerings were substantial after the State of Ohio (Aa1/AA+/AA+) sold $329mm of general obligation improvement bonds across four tranches with bumps peaking at 7bps in the 2036 maturity, falling +33bps off the interpolated MAC Curve. The Cities of Dallas and Fort Worth, TX (A1/-/A+/AA) also experienced a successful pricing after selling $299mm of international airport bonds spanning 11/2022-11/2045 with corresponding investor demand suppressing yields after the 2045 maturity was bumped 15bps, marking a 2.17 yield to allotted investors. This week's calendar is slated to remain quiet ahead of the FOMC meeting taking place tomorrow with $6.3Bn spanning 189 new issue offerings and large presence of health care deals throughout the week. The Texas Public Finance Authority (-/AAA/AAA/-) will lead the negotiated calendar offering $831mm general obligation and refunding bonds across two series with maturities spanning 10/2022-10/2041. The Economic Development Authority of The City of Lynchburg (Baa1/A-/A-/-) will also come to market to sell $212mm hospital revenue and refunding bonds across 01/2027-01/2055 on Thursday 11/04, senior managed by Barclays. This week's competitive calendar will span across 101 new issues for a total of $1.34Bn with the School District of Miami-Dade County, FL (Aa3/-/-) leading the auction calendar with $169mm general obligation school refunding bonds spanning 03/2022-03/2043, selling on Wednesday 11/03.

Negotiated ESG Offerings Week of 11/01/2021:

Posted 01 November 2021 by Matthew Gerstenfeld, Municipal Bond Business Development Specialist, IHS Markit

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