MunicipalBonds.com provides information regarding the performance of muni bonds for the past week in comparison with Treasury yields, as well as details regarding the net inflow in the muni market.
Treasury as well as muni yields declined again across the curve last week.
There was a notable upgrade for the Town of Colonie, NY’s GOLT bonds by Moody’s, the details of which are provided below. Also, we provide a quick outlook on Puerto Rico’s bond market performance.
Full-Week Bond Market Summary for April 4 - 8
- Five-year maturity Treasuries declined the most last week.
- The market reaction to the release of the March Fed meeting minutes was muted.
- Muni bond yields declined as well last week, led by the 30-year maturity.
- Puerto Rico bonds traded lower last week.
Detailed Report
- The U.S. Treasury yield remained volatile last week in response to oil prices.
- The largest decline in Treasury rates occurred on Thursday with maturities of five years and longer dropping more than six basis points.
- The Fed meeting held on Tuesday emphasized that future policy changes will be data-dependent rather than calendar-based.
- A gradual pace of policy normalization is expected.
- Muni bond yields declined last week. The 30-year muni bond led the decline by 14 basis points.
- Last week’s new issue supply of $7.8 billion was absorbed well by the market.
- Municipal bond fund flows were $505 million, which led to the 27th consecutive week of positive flow.
- High-yield municipal fund flows slowed last week but have remained positive in general.
- The new issue supply calendar is at $6.7 billion this week.
- Despite the decline in yields, the muni bond market is expected to remain in good shape.
- Puerto Rico’s legislature passed a debt moratorium bill authorizing the governor to stop payment on all Puerto Rico bond debt and staying any potential litigation in Puerto Rico courts. In response, Puerto Rico bonds traded lower.
Moody’s Upgrade/Downgrade Ratio
Upgrades:
Town of Colonie, NY’s GOLT:
Moody’s Investors Service has upgraded the general obligation limited tax (GOLT) rating for the Town of Colonie, NY to A3 from Baa1. This action affects $88 million of outstanding GOLT debt. The upgrade reflects a strengthened financial position with a return to positive fund balance in its combined operating (general, highway, and town outside village) fund.
Downgrades:
City of Atlantic City, NJ’s GO:
Moody’s Investors Service has downgraded Atlantic City, NJ’s general obligation rating to Caa3 from Caa1. The downgrade to Caa3 reflects the greater likelihood of default within the next year and the higher probability of significant bondholder impairment given an ongoing political stalemate over an Atlantic City fiscal rescue package. The downgrade also incorporates renewed signals from the state that bondholders will face losses as part of a possible debt restructuring.
Treasury Notes Yield Report
| Year | Yield | +/- BPS in Week | +/- BPS in Month |
|---|---|---|---|
| 2-year | 0.70% | -3 | -3 |
| 5-year | 1.15% | -6 | -5 |
| 10-year | 1.72% | -5 | -5 |
| 30-year | 2.55% | -5 | -6 |
Municipal Index Curve Yields
| Year | Yield | +/- BPS in Week | +/- BPS in Month |
|---|---|---|---|
| 2-year | 0.65% | -3 | -2 |
| 5-year | 0.97% | -10 | -10 |
| 10-year | 1.59% | -11 | -11 |
| 30-year | 2.54% | -14 | -15 |
Yield Ratios: Municipal Bonds vs. Treasury Bonds
| Yield Ratios | Ratio (%) |
|---|---|
| 10-year AAA Municipal vs. Treasury | 92% |
| 30-year AAA Municipal vs. Treasury | 100% |
| High-Yield Municipal vs. High-Yield Corporate | 81% |
Muni Fund Ownership on the Rise takes a look at muni fund ownership and where these figures may be headed over the coming years.
