Broker Check

Market News & Commentary - From The Desk Of David Loesch 10.21.2021

October 20, 2021
  • The PR House of Representatives approved a bill Tuesday that allows the Commonwealth to issue new bonds to replace existing debt and cut its obligations, a critical step that moves the island closer to resolving its record bankruptcy. The debt restructuring will slash $33B of debt, including $22B of bonds.
  • NYC sales-tax revenue is likely to decline by an estimated $111M annually because people work from home. The loss is minor when compared with the $7B in sales-tax revenue the city expects in 2022. Lower sales will hurt small businesses in commercial districts of the city, but I do not think it will have a significant impact on those bonds.
  • Texas lawmakers have signed off on a plan to spend billions of stimulus relief, and millions will go to the Hospital System. This allocation will be good for those bonds.
  • Last week muni yields were unchanged for the week. While Treasuries saw significant flattening (20 bps last week for the 2-30 year spread) most likely in anticipation of tapering beginning later this year, munis did not follow….yet. In the short term, if the Fed starts tapering, short rates will likely trend higher in the expectation of the Fed Fund rates rising in 2022.
  • NY MTA needs to borrow $4B in short-term debt to cover operation costs. NY and NJ have a problem allocating the relief funds, and it is creating this temporary cash problem; they have $10.5B in federal aid and need to decide by Nov 8th.
  • College enrollment continues to decrease, and this will put more pressure on college and university bonds. I think they will need to readjust over time with lower attendance and manage their debt accordingly.
  • The City of Chicago will be a frequent issuer through the end of the year. This fact includes $2.06B of new money and $2.35B for refinancing old debt.
  • NJ Transit approved a $1.6B contract to construct a new Portal North Bridge, their most significant in its history. This project will be funded by the US Transportation Department, Amtrak, and NJ Transit.



David Loesch


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