Municipals were little changed Wednesday as U.S. Treasuries were firmer and equities ended mixed.
The two-year municipal to UST ratio Wednesday was at 63%, the five-year at 63%, the 10-year at 66% and the 30-year at 84%, according to Municipal Market Data’s 3 p.m. EST read. ICE Data Services had the two-year at 62%, the five-year at 63%, the 10-year at 66% and the 30-year at 82% at 4 p.m.
The Investment Company Institute reported outflows of $336 million for the week ending Feb. 12, following $852 million of inflows the previous week. This differs from LSEG Lipper, which reported $238.5 million of inflows over the same reporting week.
Exchange-traded funds saw inflows of $1.385 billion after $109 million of inflows the week prior, per ICI data.
Supply surged to $500 billion-plus in 2024, which was not “as impactful as the direction of rates, which moved markets much more aggressively,” said Nick Venditti, Allspring head of municipal fixed income.
Issuance will remain elevated this year, as issuers can no longer “kick the can” and delay issuance as they did in 2022 and 2023, he said.
With COVID-era money dwindling, long-delayed projects and infrastructure needs have prompted issuers to tap the capital markets, Venditti said.
Last week saw outsized issuance, and deals were left with balances at week’s end, said Anders S. Persson, Nuveen’s chief investment officer for global fixed income, and Daniel J. Close, Nuveen’s head of municipals.
Last week was the fifth largest calendar in the last 12 months, and “assuming dealers are seeing an upcoming flow from rate-sensitive borrowers worried about the threat to the tax-exemption, current levels are still rich,” said Matt Fabian, a partner at Municipal Market Analytics.
So while last week concluded with a “strong buying push” from institutional accounts, the market’s marginal buyer remains separately managed accounts, which may “balk” if nominals fall too far, he said.
Issuance this week falls to an estimated $5.5 billion, in part due to the Monday holiday.
This week’s “undersized new issue supply should allow investors to clean up balances remaining from last week and absorb the small new issue calendar,” Persson and Close said.
Despite this, issuance is expected to pick up over the next few weeks.
However, the real question is whether demand rises this year to meet that supply, Venditti said.
That had been the case at the start of this year but could change, he said.
This could be a year where the “technical trade” moves the market one way or another, Venditti said.
“If demand doesn’t come and we get overwhelming supply, that will act as, at least to some extent, a weight on the muni market, but at least right now, all evidence suggests that demand is going to come back,” he said.
In the primary market Wednesday, BofA Securities priced for the Pennsylvania Economic Development Financing Authority (Aa3//AA-/) $500 million of taxable Economic Development and Infrastructure programs revenue bonds, with all bonds priced at par: 4.589s of 6/2026, 4.793s of 2030, 5.156s of 2035, 5.456s of 2040, 5.516s of 2042 and 5.689s of 2054, callable 6/1/2035.
BofA Securities priced for the San Mateo County Transit District (/AAA//) $122.145 million of limited tax refunding bonds, 2025 Series A, with 5s of 6/2026 at 2.32%, 5s of 2030 at 2.43% and 5s of 2034 at 2.63%, noncall.
In the competitive market, Guilford County (Aaa/AAA//) sold $570 million of GO school bonds to BofA Securities, with 5s of 3/2028 at 2.75%, 5s of 2030 at 2.80%, 5s of 2035 at 3.07%, 5s of 2040 at 3.38% and 4s of 2045 at 4.13%, callable 3/1/2035.
Hudson County sold $210.955 million of bond anticipation notes to BofA Securities, with 4s of 2/2026 at 2.70%, noncall.
AAA scales
MMD’s scale was unchanged: The one-year was at 2.66% and 2.68% in two years. The five-year was at 2.76%, the 10-year at 3.00% and the 30-year at 4.01% at 3 p.m.
The ICE AAA yield curve was bumped up to a basis point: 2.70% (unch) in 2026 and 2.66% (-1) in 2027. The five-year was at 2.77% (-1), the 10-year was at 2.99% (-1) and the 30-year was at 3.93% (unch) at 4 p.m.
The S&P Global Market Intelligence municipal curve was little changed: The one-year was at 2.67% (unch) in 2025 and 2.68% (unch) in 2026. The five-year was at 2.76% (unch), the 10-year was at 2.99% (unch) and the 30-year yield was at 3.93% (+1) at 4 p.m.
Bloomberg BVAL was cut up to a basis point: 2.58% (unch) in 2025 and 2.65% (unch) in 2026. The five-year at 2.76% (unch), the 10-year at 3.00% (+1) and the 30-year at 3.94% (+1) at 4 p.m.
Treasuries were firmer.
The two-year UST was yielding 4.271% (-4), the three-year was at 4.288% (-4), the five-year at 4.364% (-4), the 10-year at 4.532% (-2), the 20-year at 4.818% (-1) and the 30-year at 4.762% (-1) at near the close.
Primary to come
Miami-Dade County, Florida, (/A+/A+/AA-/) is set to price Thursday $525.93 million of airport revenue bonds, consisting of $263.765 million of AMT Series 2025A bonds, terms 2050, 2055; $71.62 million of non-AMT Series 2025B bonds, terms 2050, 2055; and $190.545 million of taxable Series 2025C bonds, term 2048. Siebert Williams Shank.
The Board of Regents of the Texas Tech University System (Aa1/NR/AA+/AA+/) is set to price Thursday $298.375 million of revenue financing system refunding and improvement bonds, serials 2026-2045, terms 2050, 2055. Siebert Williams Shank.
The Wisconsin Health and Educational Facilities Authority (A1/AA-/NR/NR/) is set to price Thursday $235.02 million of Aspirus Obligated Group revenue bonds, serials 2034-2045, terms 2050, 2055, 2055. Barclays.
The State of New York Mortgage Agency (Aa1/NR/NR/NR) is set to price Thursday $100 million of social homeowner mortgage revenue bonds, consisting of $79.515 million of non-AMT Series 266 bonds and $20.485 million of AMT Series 267 bonds. Morgan Stanley.