- Federal Reserve Chairman Jerome Powell spoke yesterday and reaffirmed they would not raise rates just for fear of inflation. He acknowledged that the effects of inflation have been more significant than anticipated and could be more persistent than initially expected. However, their data shows that these changes will wane, and inflation will move back down over time. His comments were mainly concerned with inflation, but otherwise, nothing new that we did not hear last week.
- Nuveen has increased its holdings in Puerto Rico bonds as of May 31st, surpassing their pre-pandemic level. They are betting on PR coming out of bankruptcy by the end of the year. PR’s bankruptcy resolution involves reducing $22B in debt and fixing their pension system. Nuveen estimates that PR GO’s are trading about 10% less than what bondholders will receive in total from the restructuring deal.
- This week, Texas Student Housing Authority filed for bankruptcy, listing between $10-$50 million in liabilities. The Authority owns housing properties near the University of North Texas in Denton and Texas A&M in College Station; both are excellent facilities.
- Last week's new issue volume was $12.5B; this week was $104B, 35% taxable, excluding corporates.
- Muni bond mutual funds inflow was $1.9B last week compared to $2.5B the previous week. So, it makes sense that it would slow down last week after the market catching up with Treasuries on Thursday.
- Exxon plans to reduce its headcount by 5% to 10% annually for the next three to five years in the US offices.
- Institutional investors offered $3.02B for sale through the Electronic Trading Auction Platforms last week, up 9.8% from $2.75B the previous week. So, I think we will continue to see this pattern.
- Some of the largest new issues coming to market this week are the State of Tennessee will bring $657.7M bonds. MA Educational Financing Authority $381.7M, PA Water and Wastewater Revenue with $359.5M, and Ft. Worth ISD $337.5M.
- World Trade Center developer Larry Silverstein plans to sell about $1.4B tax-exempt and taxable Munis to refinance debt issued in 2011 for a 64-story building at the World Trade Center site. It will be interesting to see how this new issue compares to the interest rates in 2011. Goldman Sachs will manage the sale.
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