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Municipal Bond Market Update September 23, 2020

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Municipal Bond Market Update September 23, 2020 Municipal Bond Market Update September 23, 2020 Once again, the market tone is a familiar one as interest borrowing costs available in today’s municipal bond market. rates are defined by the same consistency and stability that PMA’s clients are no exception to these benefits. This week, they have shown for several weeks now. The AAA Municipal the Village of Wilmette entered the market with a refunding Market Data (MMD) index closed on Friday September 18 bond issue with a par amount of approximately $16 million. at the same levels as the week prior with no change in every Beyond the favorable market conditions, the Village’s term of the yield curve, and only slightly changed by 0.01- transaction appealed to investors for two additional reasons. 0.02%, or 1-2 basis points (bps), in either direction compared First, the structure generated considerable interest with a to the week that ended September 4. Please see below for a short final maturity in December 2026 and large individual graph illustrating the level of interest rates in the municipal maturities that were greater than $2.5 million for five out of bond market since the beginning of the year. the six maturities. Second, the Village’s Aaa credit rating MMDMMD BondBOND Index INDEX: January JANUARY 2020 - Current 2020 CURRENT indicated to the investing community that they would be 3.5% purchasing a security for a reliable, healthy, and financially 5 Yr MMD 10 Year MMD 20 Year MMD disciplined community. In fact, according to its published 3.0% credit opinion, Moody’s does “not see any material immediate 2.5% credit risks for Wilmette” regarding the coronavirus outbreak. 2.0% In the end, the Village’s bond issue resulted in a True Interest Cost (TIC) of 0.42% for the entire financing. Needless to say, 1.5% both PMA and the Village were incredibly pleased with the 1.0% result. 0.5% The market continues to be strong and there are no significant 0.0% signs that interest rates will dramatically increase in the Jan 2 Feb 2 Mar 2 Apr 2 May 2 Jun 2 Jul 2 Aug 2 Sep 2 near future. If you are interested in learning more about the municipal bond market in general or about a specific bond According to the Bond Buyer, this week’s supply is estimated issue you have in mind, please do not hesitate to reach out to total $12.6 billion of municipal bonds, of which nearly to the team of advisors at PMA. In the meantime, please stay $9 billion is made up of tax-exempt financings and the healthy and be well. remaining $3.6 billion of bonds are taxable. While this is a healthy supply to the market, investor demand also remains strong. The Lipper Fund Flow Report indicated that long- Bob Lewis Andrew Kim Senior Vice President, Managing Director Director, Public Finance term municipal bond funds experienced positive inflows of PMA Securities PMA Securities over $500 million, marking the 19th week in a row that such funds had positive inflows. These factors underlie the strong Tammie Beckwith Schallmo Stephen Adams market that we have been seeing for some time now and Senior Vice President, Managing Director Director, Public Finance PMA Securities PMA Securities why issuers have been eager to take advantage of the low Financial Strategies for Stronger Communities.TM This document was prepared by PMA Securities, LLC for clients of the fi rm and its affi liated PMA entities, as defi ned below. It is being provided for informational and/or educational purposes only without regard to any particular user’s investment objectives, fi nancial situation or means. The content of this document is not to be construed as a recommendation, solicitation or off er to buy or sell any security, fi nancial product or instrument, or to participate in any particular trading strategy in any jurisdiction in which such an off er or solicitation, or trading strategy would be illegal. Nor does it constitute any legal, tax, accounting or investment advice of services regarding the suitability or profi tability of any security or investment. Although the information contained in this document has been obtained from third-party sources believed to be reliable, PMA cannot guarantee the accuracy or completeness of such information. It is understood that PMA is not responsible for any errors or omissions in the content in this document and the information is being provided to you on an “as is” basis without warranties or representations of any kind. The analysis or information presented may also contain hypothetical projections and/or past performance that have certain limitations. Past performance does not guarantee future results and no representation is made that the results are accurate or complete or that any results will be achieved. Securities, public fi nance services and institutional brokerage services are off ered through PMA Securities, LLC. PMA Securities, LLC is a broker-dealer and municipal advisor registered with the SEC and MSRB, and is a member of FINRA and SIPC. Prudent Man Advisors, LLC, an SEC registered investment adviser, provides investment advisory services to local government investment pools and separate accounts. All other products and services are provided by PMA Financial Network, LLC. PMA Financial Network, LLC, PMA Securities, LLC and Prudent Man Advisors, LLC (collectively “PMA”) are under common ownership. Securities and public fi nance services off ered through PMA Securities, LLC are available in CA, CO, FL, IL, IN, IA, MI , MN , MO , NE, OH, OK, PA, SD, TX and WI. This document is not an off er of services available in any state other than those listed above, has been prepared for informational and educational purposes and does not constitute a solicitation to purchase or sell securities, which may be done only after client suitability is reviewed and determined. All investments mentioned herein may have varying levels of risk, and may not be suitable for every investor. PMA and its employees do not off er tax or legal advice. Individuals and organizations should consult with their own tax and/or legal advisors before making any tax or legal related investment decisions. Additional information is available upon request. ©2020 PMA Securities, LLC Financial Strategies for Stronger Communities.TM.
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