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Friday, October 26, 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 • Gus Koppen

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
10/19/18 2.19 2.31 2.48 2.67 2.92 2.99 3.05 3.14 3.20 3.31 3.38
10/22/18 2.18 2.34 2.49 2.68 2.92 2.99 3.05 3.13 3.20 3.31 3.38
10/23/18 2.21 2.33 2.48 2.67 2.89 2.95 3.01 3.10 3.17 3.29 3.37
10/24/18 2.20 2.34 2.47 2.64 2.84 2.89 2.94 3.02 3.10 3.24 3.33
10/25/18 2.19 2.34 2.47 2.66 2.86 2.92 2.98 3.07 3.14 3.27 3.35
                                                                                                                                       Source: U.S. Department of the Treasury, as of 10/25/2018
 A Municipal Trader's Perspective
 
Have you forgotten about “Bank Eligible” municipal bonds – bonds that enjoy the same TEFRA treatment as “Bank Qualified” municipals?  There’s a provision of the American Recovery and Reinvestment Act of 2009 that allows banks to buy up to 2% of their assets in non-bank qualified municipal bonds if they were newly issued in 2009 or 2010, otherwise known as “Bank Eligible” bonds.

We have found several bonds in the marketplace that are 100% refundings of 2009 or 2010 Bank Eligible issues that continue to qualify for Bank Eligible treatment.

If you haven’t filled your 2% bucket, or if you’ve experienced roll-off of your Bank Eligible holdings, the following offerings are great opportunities to take advantage of the extra yield over Bank Qualified bonds.   You may even hold bonds that have been prerefunded, which could be great swap candidates.

BANK ELIGIBLE OFFERINGS:
 

BANK QUALIFIED OFFERINGS:

2.70% in 2026 (AA rated BQ G.O.’s)
3.00% in 2031 (AA rated BQ G.O.’s)
3.30% in 2034 (AA rated BQ G.O.’s)

COMPARE:
The Bank Eligible offerings above are +30 bps and +45 bps to the call date in 2026, respectively.  To the maturity date, the Bank Eligible offerings are +35 bps and +23 bps, respectively.

 


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