Tuesday, March 20, 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
3/13/18	1.64	1.73	1.90	2.03	2.26	2.41	2.62	2.77	2.84	2.98	3.10
3/14/18	1.71	1.76	1.94	2.05	2.26	2.41	2.61	2.75	2.81	2.94	3.05
3/15/18	1.70	1.77	1.95	2.07	2.29	2.42	2.62	2.76	2.82	2.94	3.05
3/16/18	1.71	1.78	1.96	2.08	2.31	2.44	2.65	2.78	2.85	2.96	3.08
3/19/18	1.70	1.80	1.99	2.08	2.31	2.45	2.65	2.78	2.85	2.97	3.09

                                                                                      Source: U.S. Department of the Treasury, as of 3/19/18  

BQs in Short Supply

Since the implementation of the Tax Reform and Jobs Act, the market has been light on municipal supply as was mentioned last week in our PMR.  Bank qualified (BQ) issuance has taken a hit with only $2.84 billion new issue BQ municipal bonds year to date compared to $3.97 billion this time last year. However, the decreased new deal flow has not been evenly distributed among states. 

TX has issued the largest amount of BQ’s YTD at $329.2 million - down $250.6 million (43%) from the previous year – while Colorado has seen a 567% increase in issuance from $6.2 million to $41.4 million.  Of our core municipal trading states, Kansas is experiencing the least amount of BQ issuance at only $36.1 million YTD.  This down nearly $10 million (21%) from this time last year. 

 

Though demand has been lighter as well with tax cuts reducing the benefit of tax-exempt municipal bonds, municipals still provide a yield advantage compared to other products.  Though with the limited supply, investors need to take advantage of the bonds that are available.  Over the next 30-day period, Kansas is only expected to issue another $5.22 million in BQ supply.  Instead of waiting for supply that may not come, check dealer inventory.

 

We own and offer the Butler, KS BQ GO bond below.  These are 4.00% coupon maturing 9/1/2027 with next call on 9/1/2025.  750m are available at 2.45% ytc / 2.733% ytm. 


Source: Bloomberg 3/19/18


Source: Bloomberg 3/19/18

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