Tuesday, March 13, 2018
MANAGING DIRECTOR: Scott Carrithers   PORTFOLIO SALES AND SERVICE: Steve Panknin • George Morris • Jeff Goble • Chris Thompson • Sean Doherty Kevin Doyle • Lonnie Harris •  Mark Tranckino • Robert Schuyler • Tom Toburen • Josh Kiefer  Nicole Burczyk • Kelley Frye • Natalie Regan • Aaron Stoffer • Chuck Honeywell

US Treasury Market
Date	1 mo	3 mo	6 mo	1 yr	2 yr	3 yr	5 yr	7 yr	10 yr	20 yr	30 yr
3/6/18	1.56	1.68	1.87	2.06	2.25	2.42	2.65	2.81	2.88	3.03	3.14
3/7/18	1.57	1.68	1.87	2.05	2.25	2.42	2.65	2.81	2.89	3.04	3.15
3/8/18	1.57	1.67	1.89	2.05	2.25	2.42	2.63	2.79	2.86	3.01	3.13
3/9/18	1.57	1.67	1.89	2.03	2.27	2.45	2.65	2.82	2.90	3.04	3.16
3/12/18	1.60	1.71	1.89	2.05	2.27	2.43	2.64	2.79	2.87	3.00	3.13

                                                                                      Source: U.S. Department of the Treasury, as of 3/12/18  

Supply & Demand

As we all know, the municipal bond market is a supply driven marketplace.  So far in 2018, demand for municipal bonds is outpacing newly issued paper and this trend is only anticipated to worsen throughout the year.  This reduced issuance in municipal supply may leave buyers fighting amongst themselves this summer for bonds as more than $130 billion in redemptions – both maturities and calls – come due in the June to August time period. For 2018 in total, already $343 billion in maturities and calls have been announced with only $310-335 billion in anticipated issuance.

For high grade municipal bond buyers, perhaps now would be a better opportunity to add to your portfolios rather than waiting since the forward lack of supply could possibly drive spread ratios even tighter. 

Consider the Buna Consolidated ISD, Texas Bank Qualified offering shown below:

 

With an underlying A2 rating by Moody’s and an enhanced Aaa rating through the Permanent School Fund (PSF) of Texas, the bonds are priced to yield 2.55% to the 2023 call and 3.09% to maturity in 2032.  These nominal yields equate to 95% and 105% of their respective Treasury yields.  For a “C” corporation, the taxable equivalent yields equate to 3.23% to the ’23 call and 3.91% to maturity in ’32.  For top taxpayers in an “S” corporation, the equivalent yields would be 3.62% and 4.39% respectively.

Country Club Bank Capital Markets offer $635,000 of this bond subject to price and availability.

 

This information is intended for institutional investors only. The material provided in this document/presentation is for informational purposes only and is intended solely for private use. Past performance is not indicative of future results. This material is not intended as an offer or solicitation for the purchase or sale of any financial instruments.

•Not FDIC Insured •No Bank Guarantee •May Lose Value