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Municipal Calendar Week of December 6th 2021

06 December 2021 Matthew Gerstenfeld

Calendar Week of 12/06/2021

Munis are full steam ahead as the market prepares to wrap up year-end financings as greater issuer activity fuels top level weekly issuance, supplying buyside accounts a plethora of new issue credits. Munis continue to demonstrate safe haven stability despite heightened levels of volatility registered throughout equities and most notably the crypto market, which experienced a drop of 20%+ in weekend trading activity, marking a standard occurrence in the rapidly expanding asset class as bitcoin currently hovers ~+152% YTD. Boosted new issue activity has supported muni benchmarks with mixed performance registered over the course of last week after bumps of 2-3bps were noted in the intermediate and long end, coupled with a cut of 1bp in the first five years of the curve given investor appetite. As investors transition into greater risk-off positions, US treasuries continue to rally given persistent inflation levels paired with accelerated FOMC tapering and potential impending rate hikes as global market fears run high. Market participants continue to closely monitor shifts in economic conditions after the November Nonfarm payroll posted a gain of +210k jobs, falling below market expectations of 500k+ and placing the unemployment level at 4.2%, marking a 40bp reduction as the nation strives to return to pre-pandemic unemployment levels of ~3.5%. Ongoing bi-partisan discussions surrounding the Build Back Better package remains a focal point across market players as concerted government-driven financing activities evolve to combat pandemic-induced economic setbacks, with the market forecasting a successful approval of the social and climate oriented package in the first month of the new year. Primary issuance over the course of last month was noteworthy, with ~$40Bn of new issue deals priced, outpacing November 2020 levels by +83% as state and local governments take advantage of historically low interest rates and surging investor demand for tax-exempt yields. With several weeks remaining until 2022, volume momentum is expected to remain hefty, satisfying overarching demand from retail and institutional investors seeking to put cash to work, placing expected yearly totals slightly behind last year's record volume of $497Bn.

Market appetite for muni bonds remains robust, with investor demand suppressing yields despite an influx in new issue activity after last week's calendar supplied $15.2Bn outpacing the 2021 weekly average of $9.4Bn, led by various large scale issuers who priced deals in the remaining month of the year. The Black Belt Energy Gas District (A2/-/-) led last week's negotiated calendar with $1Bn of gas project revenue bonds spanning across two series with maturities ranging from 12/2022-12/2026 with investor interest driving lower yields by 4-7bps with the largest bump noted in the 2022 maturity falling +21bps off the interpolated MAC. The Illinois State Toll Highway Authority (Aa3/AA-/AA-) also tapped into the primary arena with $700mm of toll highway senior revenue bonds across 01/2039- 01/2046 with bumps of 1-4bps spread throughout the scale, providing longer-date focused investors yields of 1.72-2.00%. This week's calendar is set to draw $18.7Bn, marking the largest weekly calendar of the year and will span across 219 new issues with The Golden State Tobacco Securitization Corporation offering a combined $4.2Bn of tobacco settlement asset-backed bonds across two separate tranches with maturities ranging from 2022-2052, with the greatest par size noted in the 30YR tenor; senior managed by Jefferies. The San Joaquin Hills Transportation Corridor Agency (-/A/BBB/-) will also price on a negotiated basis, supplying $1.2Bn of senior lien toll road revenue refunding bonds across two series pricing on Wednesday 12/08 and senior managed by Goldman Sachs. This week's competitive calendar will span across 99 new issues for a total of $4.6Bn, led by the Dormitory Authority of the State of New York (-/AA+/AA+/-) auctioning $2.5Bn of state personal income tax revenue bonds across six individual tranches with maturities spanning 2023-2046, selling throughout Thursday 12/09.

Negotiated ESG Offerings Week of 12/06/2021: