Issuers to Get Ahead of Budget Reconciliation Bill With Heavy Supply; Unrated Senior Living Communities to Test Market Again

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After the past couple weeks of dense supply, this week’s nearly $7.8 billion on the new issue calendar can be a relief to muni market investors. “The story right now is the significant amount of supply,” said Cooper Howard, director of fixed income research at Schwab Center for Financial Research.

“Even though issuance is up, if there’s enough demand to support it, we won’t see a big move in yields,” Howard said. The 10-year MMD ended at 3.32% for the 10-year bonds and 4.53% the 30-year bonds as of June 12. The AAA MMD benchmarks roughly remained steady from June 5 at 3.34% for the 10-year bonds and 4.56% for the 30-year bonds.

Municipal mutual funds recorded $523 million of inflows for the week ended June 13, compared with $426 million of inflows the week prior, according to Barclays Research. Net year-to-date inflows totaled $10.4 billion, including $2 billion of inflows for mutual funds and $8.4 billion of inflows for exchange-traded funds.

On the policy front, as the “One Big Beautiful Big Act” moves through the Senate, segments approved by the House of Representatives might be tweaked by this new round of lawmakers, Howard noted. For instance, the state and local tax, or SALT, deduction cap is already being eyed for changes, narrowing to $30,000 from $40,000 in the House’s version of the bill, he said.

“Issuers are wanting to get ahead of [the bill], and take that uncertainty off the table. Borrowing costs and infrastructure needs are relatively high,” Howard said.

In terms of macro news, the May Consumer Price Index and Producer Price Index prints came in “better than expected on the inflation front,” according to Howard. “It’s somewhat of a surprise, since these were the two bigger reports that would’ve captured the initial impact of tariffs.”

The Wildflower Project municipal utility district, or MUD, and Legacy Traditional Schools plan to be in the market today and tomorrow, respectively.

Jefferies, BofA Securities, Morgan Stanley and JPMorgan won the competitive bids for Maryland’s $1.56 billion general obligation bond, or GO, offering of Series A and B last week. Proceeds of the Series A bonds will finance the acquisition and construction of various state facilities and capital grants to local governments for schools, hospitals and other projects. Series B bond proceeds will refund certain outstanding GO bonds of the state.

Meanwhile, the city of Philadelphia also priced $874 million of GO bonds in a negotiated sale last week. Bond proceeds will be applied toward projects in the city’s capital budget. The city is also looking at selling another $325 million of airport revenue bonds in August.

The city’s GO deal benefited from a recent ratings upgrade, a source added, but fiscal pressures linger. The deal priced at yields ranging from 3.45% to 4.7% for the tax-exempt series.

IDEA Public Schools also borrowed $288 million in charter school bonds, which is enhanced by the Texas Permanent School Fund, or PSF, to AAA. This deal follows the International Leadership Texas, another PSF-backed charter school that priced last week.

Sterling Traditions Development Co. priced the $41 million unrated MUD deal last week, composed of capital appreciation bonds. Bond proceeds will finance a residential community development in northeast Houston.

Meanwhile, Convivial Jacaranda Trace tried to reenter the market after changes were made from its original April deal. The deal has gone day to day, according to sources. Some of the changes include reducing the size of the deal to $200 million from $231 million and adding tax-exempt mandatory paydown securities to the deal structure to help reduce long-term debt, a source added. As people move into the community, the entrance fees will help pay down the debt.

The community is a private condo mix, and many in the market might not rush to participate in an unfamiliar name, the source said. Otherwise for the senior-living space, Sunrise of Manhattan Beach hopes to bring another deal to market for its Long Beach property over the next month, the source added.

Octus, formerly Reorg, has a list of potential borrowers coming to market, compiled from a combination of EMMA disclosures and MuniOS deal alerts. New additions in the past week include JFK NTO LLC and Irvine Ranch Water District.

New Issue Calendar
Issuer	Obligor	Amounts (000s)	Purpose	Timing	Deal Team
Irvine Ranch Water District	Irvine Ranch Water District	$125,000	Refund BABs	Week of July 7	BofA Securities, Goldman Sachs	EMMA
New York Transportation Development Corp.	JFK NTO LLC	TBD	New Terminal One at JFK	July 2025	Barclays Capital, Loop Capital Markets	EMMA

The deals that have gone day to day since June 2023 are shown in the chart below:

Day-to-Day Calendar
Issuer	Amounts (000s)	Original Pricing Date	Deal Team	Intel
Domain at Midtown Park	$119,000	June 1, 2023	Goldman Sachs	Intel
QCF Behavioral Hospitals I	$232,000	June 29, 2023	Citigroup	Intel
Axis Kessler Park	$91,000	July 27, 2023	Goldman Sachs	Intel
WFCS Holdings III	$43,000	Aug. 14, 2023	BofA Securities	Intel
Earlham College	$50,000	Oct. 16, 2023	PNC	Intel
Muse at Midtown	$91,000	Oct. 16, 2023	Citigroup	Intel
American Tires Works	$1,150,000	March 19	Hilltop Securities	Intel
The J. Paul Getty Trust	$500,000	April 3	Jefferies, Morgan Stanley	Intel
Convivial Jacaranda Trace	$203,080	April 14	Ziegler	Intel
Chartercare Health	$140,664	May 22	Barclays	Intel

A repository of the current and historical forward calendars, muni primary issuance trackers and Build America Bonds trackers can be found HERE.