Portfolio Managers Report: Munis are boring, until they're not 04/18/25

Friday, April 18, 2025
MANAGING DIRECTOR: Scott Carrithers PORTFOLIO SALES AND SERVICE: Chris Thompson • Sean Doherty • Mark Tranckino • Brian Schaff Natalie Regan • Aaron Stoffer • David Farris • Jeff Macy Josh Kiefer • Todd Czinege • Trey Valentine • Cody Kreutziger

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
04/11/25	4.29	4.32	4.20	4.04	3.96	4.01	4.16	4.33	4.49	4.94	4.87
04/14/25	4.30	4.31	4.19	4.00	3.85	3.87	4.01	4.19	4.38	4.85	4.81
04/15/25	4.30	4.31	4.19	4.01	3.85	3.86	3.98	4.15	4.33	4.82	4.78
04/16/25	4.29	4.31	4.19	3.96	3.77	3.78	3.90	4.08	4.28	4.78	4.74
04/17/25	4.29	4.32	4.20	3.98	3.80	3.80	3.94	4.12	4.33	4.83	4.80

The data in the table above is static as of the time it was pulled, so rates may have changed. Treat all data in this table and PMR as indications only and availability is always subject to change. This information was pulled manually from sources we believe to be reliable. New source, as of 12/12/2022, Bloomberg, L.L.P. As of: close of business 4/17/2025.

Munis are boring, until they're not

Municipal bond traders are still licking their wounds after last week. The 10-year AAA MMD spot has swung in a 100 basis point-plus range over just 10 sessions. Potential buyers have had access to absolute levels generating taxable equivalent yields 150 basis points or greater to respective UST yields. Buy and hold investors are feeling like winners after locking in tax exempt yields over 4% in the intermediate range and 5%+ in the long end at ratios we haven’t seen since the COVID market blow up.

The shortened easter week has brought some reprieve to the market and ratios have both settled in with lighter new issuance and a more stable treasury market. The good news is, the muni/treasury ratio range we have moved into should be far more attractive to investors than anything they’ve seen in the past couple of years.

The 10-year BVAL/UST average ratio in the last 12 months is 67% but has now reached the upper- 70% range. Long-dated munis traded to an average 84%/UST ratio in the last year but have since corrected to over 90%/USTs. The last major dislocation cycle that occurred at the onset of the pandemic forced ratios above 200%/USTs. However, by the end of 2020, both 10- and 30-year relative values had reverted to more traditional ranges (70%-85%).

Examples of where rates/ratios can be purched now, we can look to a few recent offerings we have:

Unlimited Tax Missouri Bank Qualified, Moody’s A1 underlying rating with AA AGM Insurance

100m Antonia FPD, MO 5.25 3-1-44/33 4.15YTC 4.66YTM

A 4.15% tax free yield in 2033 is 100% of treasuries, and these kick 102% of treasuries to maturity in 2044.

An S-Corp investor paying ~30% in taxes would receive a 5.67% taxable equivalent yield to the 2033 call and over a 6.30% taxable equivalent yield to maturity. These are much better rates/ratios than we have been able to offer for quite some time.

Our recent Mcpherson, KS new issue we underwrote Is a great example of where rates/ratios are in the shorter end of the curve.

Every market and tax environment is different but I like the use this little chart below to demonstrate where/when there is value in the municipal market – we have certainly shifted into that range this month.

If you have any questions or comments about any of the topics above or would like to learn more about the current municipal bond market, please reach out to your Country Club Bank representative. Thank you and Happy Easter!

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.

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