Broker Check

Market News & Commentary - From The Desk Of David Loesch 01.05.2022

January 05, 2022
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  • Bank of America Securities was the top underwriter of municipals in 2021, capturing 13.6% of the market. Citi ranked second with 9.91%, followed by JP Morgan with 7.82%.     
  • US municipal issuance surged to an all-time high last year, and some predict even more significant sales in 2022.
  • Puerto Rico's government and the Fiscal Oversight Management Board agreed to negotiate police and teacher pensions, removing another obstacle to the island's historic bankruptcy proceedings. In a statement last week, the oversight board said the two sides agreed to hammer out "enhanced retirement benefits" for police within 60 days and teachers within 120 days.
  • Investors seeking shelter from rising rates in 2022 should look to housing bonds, according to JPMorgan Chase & Co.'s lead municipal strategist. Debt issued by states to finance low-interest loans for first-time homebuyers or build affordable housing carry higher yields and is less volatile. Hence, they typically perform better than other municipal sectors when rates rise, said Peter DeGroot, the bank's head of municipal research and strategy. According to JPMorgan, housing bonds rated AA, and A provide an average extra yield of 11 to 35 basis points over similarly rated revenue bonds to compensate for uncertainty about how quickly homeowners will pay off their mortgages and because investors demand a premium for liquidity. Housing bonds are subject to "extraordinary redemption" calls even if there are no stated calls. This continuously callable feature is something to keep in mind when buying this sector. Housing bonds are also typically called at par or a very slight premium, thus affecting your actual return on investment.
  • Visible supply begins the week at $3.5 billion, well below the 2021 average of $11.4 billion.
  • The State of Texas collected a total of $3.6B in sales taxes for December, 24.4% more than 2020.

 

David Loesch

dloesch@drlgroup.net

www.drlgroup.net

605-B Park Grove

Katy, TX 77450

866.664.4040 (toll-free)

281.398.8600 (direct)

281.398.8607 fax

 

This report has no regard to the specific investment objectives, financial situation, or particular needs of any specific recipient. This report is based on information obtained from sources believed to be reliable, but no independent verification has been made, nor is its accuracy or completeness guaranteed. This report is published solely for informational purposes and is not to be construed as a solicitation or an offer to buy or sell any securities or related financial instruments. Opinions expressed herein are subject to change without notice. The division, group, subsidiary, or affiliate of NewEdge Securities, Inc., is under no obligation to update or keep the information current. The securities described herein may not be eligible for sale in all jurisdictions or to certain categories of investors. NewEdge Securities, Inc. accepts no liability for any loss or damage of any kind arising out of the use of this report. Please contact your tax advisor regarding the suitability of tax-exempt investments in your portfolio. Income from municipals may be subject to state and local taxes and the Alternative Minimum Tax. Corporate and Municipal securities are subject to gains/losses based on the level of interest rates, market conditions, and credit quality of the issuer. As with any security, there is an inherent market risk possibility as to principal if the security is not held to maturity. The non-rated bonds (NR) should be considered for investment by knowledgeable and sophisticated investors. Additional information will be made available upon request.

 

 

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The DRL Group is not a registered entity or a subsidiary or control affiliate of NewEdge Securities, Inc.

 

 Bonds are subject to market and interest rate risk if sold prior to maturity. Prices and availability may change at any time without notice. Insured bonds are subject to the claims-paying ability of the insurance company.

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