The status of the war in Iran is confusing, Hennion & Walsh's James Pruskowski said, but high absolute rates are giving the muni market a strong start to June.
Issuers using cash basis accounting pay a yield premium to sell bonds, according to a new paper, and their bonds are less likely to trade in the secondary.
The quartet of accelerated deals is among at least 25 additional unique credits above $100 billion coming to market, a major contributor to the surging supply of $18 billion to $20 billion this week.
Moody's Ratings has announced a credit rating downgrade to A2 from A1 for AU, due to operating pressure which comes on the heels of a 4% tuition hike earlier this spring.
Market Intelligence analyst Jeff Lipton notes that coupon selection is often a strategy decision, not a price preference, and explains why premium coupons can help mitigate adverse price moves while giving investors flexibility through higher ongoing tax-free income.
"When FINRA and MSRB rules which cover similar functions differ in their application, it raises compliance costs for dealers and raises the risk of inadvertent noncompliance," the Bond Dealers of America said in its letter.
This week will see continued stability, given the recent bumps on deals in the primary market last week and the lack of negative headlines about the war with Iran, said Elaine Brennan, executive director of the public finance department at Roosevelt & Cross.
The New York Convention Center Development Corporation is coming to market for the first time in more than a year, with bonds backed by a hotel surcharge.
The muni market is experiencing "some short-term optimism," said Hilltop Securities' Tom Kozlik, but there are still "pressures that could potentially be with us for not just weeks, but months."
Federal Reserve Vice Chair for Supervision Michelle Bowman said Friday that she believes price growth is still heading toward the central bank's 2% target when factoring out one-time shocks such as tariffs and elevated oil prices.
The Maryland Economic Development Corporation and the Internal Revenue Service have reached a resolution in a tax squabble over a bond issuance where proceeds of the sale were not spent within a three-year time window.
June redemptions are $44.4 billion. July and August will see $37.7 billion and $38.4 billion returned, respectively, said Pat Luby, head of municipal strategy at CreditSights.
Market Intelligence analyst Jeff Lipton explains why energy prepays have become a popular SMA allocation for yield and diversification, while warning that financial institution counterparty concerns and "guilt-by-association" bank headlines can still trigger episodic spread widening.
The Federal Reserve Board governor is the latest Fed official to embrace the prospect of tighter monetary policy in response to rapidly rising prices that have taken hold in recent years.
The muni market's gains are likely a continuation of Tuesday, Charles Schwab's Cooper Howard said, but markets could turn sour after personal consumption expenditures data is released Thursday.
Issuers are watching Washington D.C. gearing up for a water bill reauthorization, along with decisions on state revolving funds, appropriation levels and the future of WIFIA.
Municipal finance professionals surveyed by The Bond Buyer said unrealistic revenue projections were the top driver of problems for public-private partnership deals.
In general the bond market is volatile, and fixed income securities carry interest rate risk. (As interest rates rise, bond prices usually fall, and vice versa. This effect is usually more pronounced for longer-term securities.) Fixed income securities also carry inflation risk and credit and default risks for both issuers and counterparties. Unlike individual bonds, most bond funds do not have a maturity date, so avoiding losses caused by price volatility by holding them until maturity is not possible.
Lower-quality debt securities generally offer higher yields, but also involve greater risk of default or price changes due to potential changes in the credit quality of the issuer. Any fixed income security sold or redeemed prior to maturity may be subject to loss.
Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information. Read it carefully.
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