Vol. 392 No. F563 N.Y., N.Y. THE DAILY NEWSPAPER OF PUBLIC FINANCE Friday, May 1, 2020 FRIDAY April Sees April municipal bond issuance www.bondbuyer.com Fight on as Light Muni $50B THE REGIONS Muni Board MAJOR FISCAL PRESSURES FACING $40B New Jersey from the COVID-19 Issuance pandemic prompted a nega- BY AARON WEITZMAN $30B Slims Down tive outlook from S&P Global Ratings to the state’s $33.6 April finished with $23.7 billion of municipal bond is- $20B BY SARAH WYNN billion of outstanding debt. 4 suance, a 15% decline from the $27.9 billion that was issued in $10B The Municipal Securities THE METROPOLITAN TRANSPORTATION April of 2019 and the lowest Rulemaking Board’s proposal to Authority could tap the Federal muni volume total in the month reserve two seats for municipal ad- Reserve’s new liquidity pro- of April since 2011. $0 visors is drawing protest from the gram indirectly through New Volatility from the pandem- 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 broker-dealer community as the ic has caused erratic swings in MSRB looks to how to reconfig- York State to help cope with benchmark yields and an envi- Source: Refinitiv ure a possibly shrinking board of its massive financial hit from ronment in which issuers and directors. COVID-19, its chief financial dealers alike have struggled to In a Wednesday comment letter, officer said.. 4 bring new deals to market. decrease from the $27.93 bil- “With the building concern the Securities Industry and Finan- Municipal volume was lion in 711 transactions that got over credit, many issuers chose cial Markets Association said re- WEB EXCLUSIVES $23.76 billion spanning 703 done in March of 2019. to postpone or even cancel their serving two seats gives MAs too deals, a decrease from the “We were off this month by deals, especially if they were much representation under a pro- S&P GLOBAL RATINGS ON THURSDAY $27.96 billion in 842 trans- roughly a week and half of is- not of a critical nature,” he posal to reduce the MSRB’s board revised the rating outlook actions there were in April of suance and I think that is pret- said. “We also think that issuer size to 15 from 21 members. to negative from stable on 2019, although volume did ty good, considering what has capital plans were and will con- “This proposal not only gives increase from March’s pal- happened,” said Peter Block, tinue to be reviewed against the municipal advisors outsized repre- Detroit’s BB-minus issuer cred- try $16.99 billion of issuance managing director of credit and backdrop of heightened eco- sentation compared to other regu- it rating and 2018 unlimited spanning 522 deals, a 39.2% market strategy at Ramirez and nomic, budgetary, and credit lated categories, but it also favors tax-general obligation bonds. company. uncertainty.” certain types of municipal advisors The sharp drop in April Lipton added that the market over others,” wrote Leslie Nor- ILLINOIS PUBLISHED ITS FISCAL 2019 THURSDAY’S YIELDS volume can be ascribed to should prepare for a backlog wood, SIFMA’s managing director, in issuance should the econo- financial results Thursday as The Bond Buyer 40 the outsized concern over the associate general counsel. COVID-19 pandemic and the my begin to come back on line Currently, within the public rep- strains from the coronavirus 5.3 To Maturity related economic closure, ac- sooner than expected with cred- resentative category, at least one pandemic loom large over fis- 3.93 Unchanged 4.5 cording to Jeffrey Lipton, it not materially impacted. board member must be represen- cal 2020 and 2021. managing director of munici- “As the market dramatically tative of institutional or retail in- 3.7 pal research and strategy and sold off in March, mutual funds vestors, at least one be representa- municipal capital markets at were actively liquidating hold- tive of issuers and at least one be WITH SOME ECONOMISTS forecast- 2.9 ing the worst downturn since Oppenheimer & Co. Turn to April page 14 Turn to Dealers page 3 2.1 To Par Call the Great Depression, munici- 3.59 Up 0.02 pal bond investors might want 1.3 04/17 04/22 04/27 04/30 to know what happened to How Pandemic Impacted a Hospital Bankruptcy state and local debt securi- 5.5 BY KEELEY WEBSTER ties during that event, writes 5.0 Marc Joffe of The Reason 4.5 The coronavirus pandemic Foundation. 4.0 changed the course of the bank- 3.5 ruptcy proceedings for a failing PODCAST: WILLIAM SIMS AND JIM 3.0 non-profit hospital chain. Bodine of Herbert J. Sims 2.5 In March, California Gov. 2.0 & Co. discuss the impact of Gavin Newsom was looking for 1.5 properties to create 50,000 new COVID-19 on the senior living AMFJDNOSAJJM hospital beds to cover anticipat- industry. Complete market coverage appears on page 2 ed shortfalls of treatment space for COVID-19 patients. Included on a list of 15 prop- erties he secured are two Verity Health System hospitals — one of which had closed — that the state is leasing for three months at a cost of $30 million. The agreement was approved by the U.S. Bankruptcy Court on March 20. Los Angeles County The six-hospital chain filed The California government is leasing Verity Health’s shuttered St. Vin- Turn to State’s page 5 cent Hospital in Los Angeles as a surge facility for COVID-19 patients. 001_BB050120 1 4/30/2020 5:15:20 PM Market News Friday, May 1, 2020 2 The Bond Buyer Dislocations in Trading, Pricing Remain in Municipal Market The municipal secondary was steady again, sources said. said. get deals done, or start at a concession to Thursday according to AAA benchmarks Meanwhile, the Municipal “It’s a day with scales un- the market to get the attention of the buy but several trades pointed to dislocations Securities Rulemaking Board changed, but certainly a wari- side,” Stare said, noting that is especially on several high-grade names. Thursday released trading ness in the muni markets,” true for relatively smaller deals under $50 Market participants indicated the dislo- statistics for the first quarter John R. Mousseau, president million. cations were likely attributable to month- of 2020 that “reflect signifi- and chief executive officer “The bellwether names are getting done end accounting issues. cant disruption.” and director of fixed income and not being heavily oversubscribed,” The primary saw two deals from Cali- “Trading volume reached at Cumberland Advisors, said he said, pointing to this week’s $1.1 bil- fornia, a San Diego water deal and a City highs not seen since 2008, Thursday afternoon. lion New York Power Authority deal. “It and County of San Francisco GO offer- with par amount traded to- “There’s clearly a hang- wasn’t a riot, but was a successful transac- ings, both priced with bumps in a repric- taling about $1 trillion,” the over from Mitch McConnell’s tion that was not terribly oversubscribed. ing. MSRB said. “Retail trade BY LYNNE FUNK statement from last week,” he “Once you get north of $100 million The yields on the original pricing were activity, measured as trades added, pointing to the U.S. you can usually attract the buyers to look cheap, according to some traders, who of $100,000 or less, declined Senate Majority Leader’s at the deal but it depends on credit and said it was “unsurprising” because the while institutional trades of more than $1 comments on April 22 that cash-strapped price,” Stare said. deal was “priced to go.” million increased compared to the first states impacted by COVID-19 declare He said spreads have widened out be- Lipper reported $1.26 billion of out- quarter of 2019.” bankruptcy. cause the market doesn’t believe the tri- flows out of municipal bond mutual funds, There still was a relatively quiet tone in “The big question is do we ramp back ple-A curve is where it should be, and signaling this market is not fully stable yet the market Thursday spurred by a range of to 95% economic activity pre-crisis — many are being cautious and sitting on and retail is not yet ready to engage. technical issues, from month-end account- which is still a recession — or to 80% the sidelines. What it all points to is that the market ing and financing to spread widening, of pre-crisis, which is near Depression “Today you have month end, so that’s is seeing a steady upward yield trend and price volatility and the COVID-19 impact levels,” Mousseau said. one of the reasons the market is quiet — higher gross yields are attracting buyers on businesses and the economy, sources “It’s fairly quiet,” a day ahead of cities people are squaring away their books,” and counties re-opening restaurants and he said. stores to jump-start the economy in Texas, Overall, larger deals are got much of the according to Pete Stare, municipal under- primary market’s attention, even though it Powell Says Fed Will Stay Vigilant writer at Hilltop Securities in Dallas. lacks conviction and is on “soft ground,” “I think the market has a decent tone according to a New York trader. to it, but the problem is we have been “The market was pleased to see the Dealing with Coronavirus Effects through 10 days or so that the MMD curve Power Authority transaction go well on After the Federal Reserve conference that they would has been cut to higher yields,” he said.