Texas Market Update Week of July 9, 2018 0
bps Market Update * Commentary for the week of July 9 th Municipal volume for this week is estimated at $6.6 billion, significantly higher than the revised total of $4.6 million of the previous July 4th shortened week. The primary municipal calendar is comprised of $5.5 billion of negotiated deals and $1.2 billion in competitive sales. Texas municipal issuance is estimated to be $1.12 billion this week compared to the empty calendar from the previous week. The primary Texas municipal calendar is comprised of $1.05 billion of negotiated deals and $71 million in competitive sales. This week Estrada Hinojosa will participate in two Texas financings: $148M Aldine ISD (Co-Manager) and $2.9M Laguna Madre Water District (F.A.). As of Friday s MMD, the 10-year and 30-year muni yield dropped two basis points to 2.43% and 2.90%, respectively, from Thursday s close. Furthermore the two-year, 10-year and 30-year Treasury yield fell one basis point to 2.53%, 2.83% and 2.94%, respectively, from Thursday s close. MMD to Treasury Ratios 125% 10Y MMD/10Y Treasury Ratios 20Y MMD/20Y Treasury Ratios 30Y MMD/30Y Treasury Ratios MMD Rates AAA 10 Y AAA 20 Y AAA 30 Y 3.50 2.50 1.50 1.00 AAA MMD to BBB MMD Spreads 10Y AAA vs BBB MMD Spread 110 20Y AAA vs BBB MMD Spread 30Y AAA vs BBB MMD Spread 100% 85 75% 60 Source: * Bond Buyer Municipal Market Data Thomson Reuters TM3 1
($bn) Market Update Calendar Week of July 9 th Ratings* Bond Buyer 30-Day Visible Supply** Issue Description Sale (week of) Par Amount ($000) Moody's S&P Fitch Leander ISD, TX - U.L. Tax Ref Bds, Taxable Ser. 2018A North East ISD, TX - U.L. Tax Ref Bds, Ser. 2018 Aldine ISD, TX - U.L. Tax School Building Bds, Ser. 2018 State of TX - G.O. Bds - Wtr Financial Assistance Ref Bds, Ser. 2018B (Subseries 2018B-3) Mesquite ISD, TX - U.L. Tax School Building Bds, Ser. 2018 Lewisville ISD, TX - U.L. Tax School Building Bds, Ser. 2018 State of TX - G.O. Bds - Wtr Financial Assistance Ref Bds, Ser. 2018B (Subseries 2018B-1) State of TX - G.O. Bds - Wtr Financial Assistance Ref Bds, Ser. 2018B (Subseries 2018B-2) Wimberley ISD, TX - U.L. Tax School Building Bds, Ser. 2018 San Antonio Housing Trust Fin Corp. TX - M- Family Hsng Rev Bds, (St. John's Apts) Ser. 2018 Texas Top 10 Total Negotiated Supply $ 1,049,815 Texas Total Negotiated Weekly Supply $ 1,049,815 Daily $ 207,465 NR AAA NR 7/9 $ 148,090 Aaa NR AAA 7/9 $ 148,000 Aaa AAA NR 7/9 $ 144,290 Aaa AAA AAA 7/9 $ 125,600 NR AAA AAA 7/9 $ 114,855 NR AAA AAA 7/9 $ 48,000 Aaa AAA AAA 7/9 $ 48,000 Aaa AAA AAA 7/9 $ 42,515 NR AAA NR 7/9 $ 23,000 Aaa AAA NR Bond Buyer 30 Day Visible Supply Bond Sales Volume 60 50 40 30 20 10 0 AAA MMD yield curve*** Jul-17 5.00 Jun-18 Jul-18 1.00 Thru 7/13/2018 Thru 7/14/2017 Thru 7/15/2016 Thru 7/17/2015 Total Texas Supply YTD $16,114,870 $20,853,601 $32,838,458 $32,436,408 0.00 1 3 5 7 9 11 13 15 17 19 21 23 25 27 29 Year *Rating reflects underlying or insured rating, as appropriate **Source: Bond Buyer ***Source: Municipal Market Data 2
Bond Buyer Indices vs. 30 Year Treasury: 30 Year History 1 BB 11 GO Index BB Revenue Index 10.00 30 Year Treasury 8.00 6.00 BB 11 GO Index BB Revenue Index 30 Year Treasury High 9.05 9.59 10.20 Low 2.39 2.98 2.11 Average 4.70 5.30 4.99 Current 3.34 4.35 2.94 0.00 Jul-87 Jul-89 Jul-91 Jul-93 Jul-95 Jul-97 Jul-99 Jul-01 Jul-03 Jul-05 Jul-07 Jul-09 Jul-11 Jul-13 Jul-15 Jul-17 Source: Bond Buyer 3
bps Tax-Exempt and Treasury Spreads: 1 Year History Bond Buyer Indices vs. 30 Year Treasury 5.00 BB 11 GO Index BB Revenue Index 30 Year Treasury 4.50 MMD Rates 3.50 AAA 10 Y AAA 20 Y AAA 30 Y 3.50 2.50 2.50 1.50 1.00 MMD to Treasury Ratios 115% 105% 10Y MMD/10Y Treasury Ratios 20Y MMD/20Y Treasury Ratios 30Y MMD/30Y Treasury Ratios AAA MMD to BBB MMD Spreads 10Y AAA vs BBB MMD Spread 20Y AAA vs BBB MMD Spread 30Y AAA vs BBB MMD Spread 95% 90 85% 75% 75 Source: Municipal Market Data Thomson Reuters TM3 Bond Buyer 4
Disclaimer This document is intended for discussion purposes only and, in conjunction with oral presentations and further negotiations, is subject to the final terms of definitive transaction related written agreements, if appropriate, and is not a commitment to lend money, underwrite or purchase securities or commit capital, nor does it obligate this firm to enter into written agreements. Terms and conditions described herein are an indicative summary which may be amended or replaced by subsequent summaries. This document is intended for the exclusive use of the entity identified on the cover page hereof or otherwise identified as the recipient by a member of the firm and may contain information proprietary to Estrada Hinojosa, which by acceptance of this document obligates you to use discretion when sharing the proposed terms for any prospective transaction. With this communication, Estrada Hinojosa is not assuming the role of your independent registered municipal advisor and is not attempting to establish a fiduciary relationship with you pursuant to the SEC s Municipal Advisor Rule. Estrada Hinojosa is acting in its own interests with a view to underwriting and distributing your municipal securities in an arm's length commercial transaction and you should discuss any action you intend to take with any and all internal or external advisors and experts that you deem appropriate before acting on this information or material In addition, Estrada Hinojosa does not provide accounting, tax or legal advice and any discussion of such matters herein should not be relied upon by you as a guarantee or commitment of a specific result should a transaction occur. All numbers and prices discussed herein are preliminary and indicative of market conditions on the date prepared and do not represent bids or offers, and you should determine, without reliance upon us, the economic risks and merits as well as the legal and tax consequences of any such transaction, keeping in mind that the results of analyses from any quantitative model which represent potential future events that may or may not occur, and that may not include every particular material fact related to a proposed transaction, are by their nature subject to further discussion and examination. 2018 Estrada Hinojosa & Company, Inc. Member: FINRA & SIPC. All rights reserved. No part of this document may be reproduced in any manner without the written permission of Estrada Hinojosa & Company, Inc.