Friday, July 31, 2020 |
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| 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 • Natalie Regan • Aaron Stoffer • David Farris |
| 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 |
| 07/24/20 | 0.10 | 0.11 | 0.14 | 0.16 | 0.14 | 0.17 | 0.27 | 0.44 | 0.59 | 1.03 | 1.23 |
| 07/27/20 | 0.10 | 0.11 | 0.14 | 0.14 | 0.15 | 0.18 | 0.30 | 0.46 | 0.62 | 1.05 | 1.25 |
| 07/28/20 | 0.09 | 0.11 | 0.12 | 0.14 | 0.14 | 0.16 | 0.26 | 0.44 | 0.59 | 1.01 | 1.22 |
| 07/29/20 | 0.09 | 0.11 | 0.12 | 0.13 | 0.12 | 0.15 | 0.25 | 0.43 | 0.58 | 1.03 | 1.24 |
| 07/30/20 | 0.10 | 0.09 | 0.11 | 0.11 | 0.11 | 0.14 | 0.23 | 0.40 | 0.55 | 0.98 | 1.20 |
Source: U.S. Department of the Treasury, as of 07/30/2020
TAXABLE MUNI ISSUANCE REMAINS STRONG
TAXABLE MUNI ISSUANCE REMAINS STRONG
A robust new issue supply of taxable municipal bonds shows no signs of abating as issuers continue to take advantage of historically low yields to advance refund prior tax-exempt issues with those subject to federal tax. The volume of municipal taxable issuance is now more than three times what it was at this time last year and accounts for a whopping 30% of total municipal sales year-to-date.
Since there is no par value limit on taxable issuance (unlike the $10 million annual bank qualified cap), bank portfolio managers can choose from a broader selection of credits, presenting opportunity for diversification into larger metropolitan issuers. Additionally, as the issuance has picked up substantially, overall liquidity has improved. Taxable municipals appeal to a wider audience of investors than typical tax-frees so secondary demand is traditionally strong.
Consider this short high-grade general obligation taxable bond offering that we own and offer:
Issuer: Camus School District No. 17, Clark County, Washington
Type: Unlimited Tax General Obligation Bonds
Credit Enh.: Washington State School District Credit Enh. Program
Rating: Moody’s Aaa (Underlying Aa2)
Tax: Subject to Federal and State Income Tax
Par Value: $2,750,000
Coupon: 1.75%
Maturity: 12/01/2024
Callable: Non-callable
Settlement: 08/04/2020
Yield/Price: 0.75% / 104.255
With the 5 year Treasury trading @ .23% and bank qualified munis at roughly .30%, this taxable bond provides a nice yield pick-up, diversity, and good liquidity down the road.
Let us know if we can help, and have a safe weekend!
Since there is no par value limit on taxable issuance (unlike the $10 million annual bank qualified cap), bank portfolio managers can choose from a broader selection of credits, presenting opportunity for diversification into larger metropolitan issuers. Additionally, as the issuance has picked up substantially, overall liquidity has improved. Taxable municipals appeal to a wider audience of investors than typical tax-frees so secondary demand is traditionally strong.
Consider this short high-grade general obligation taxable bond offering that we own and offer:
Issuer: Camus School District No. 17, Clark County, Washington
Type: Unlimited Tax General Obligation Bonds
Credit Enh.: Washington State School District Credit Enh. Program
Rating: Moody’s Aaa (Underlying Aa2)
Tax: Subject to Federal and State Income Tax
Par Value: $2,750,000
Coupon: 1.75%
Maturity: 12/01/2024
Callable: Non-callable
Settlement: 08/04/2020
Yield/Price: 0.75% / 104.255
With the 5 year Treasury trading @ .23% and bank qualified munis at roughly .30%, this taxable bond provides a nice yield pick-up, diversity, and good liquidity down the road.
Let us know if we can help, and have a safe weekend!
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