Muni 30-Year Yield Highest Since at Least 2011

Recent painful sell off has driven the rate on benchmark thirty year municipal yields to its highest level since at least 2011. Here to report is Bloomberg's Aashna Shah in New York and Shruti Singh in Chicago. Aashna, we're gonna start with you. Just give us the backdrop broadly of how the muni bond market is reacting to these higher bond yields. Yeah. I mean, today, we're seeing a little bit of relief in the market. We're seeing, yields down seven basis points as of 12PM. But for the past weeks, we've been contending with some pretty high yields. I mean, like you mentioned the most since, 2011 at least. And this has created a really interesting dynamic in the market because from the investor perspective, from people I've been talking to, they're saying that these higher yields are creating a buying opportunity for people who might be waiting to get into the muni market. It's creating an opportunity for investors to tax loss harvest. Some people are saying this is... You know, investors are also just spooked by the sell off, which is why we saw earlier this week the biggest day of trading in the muni market in almost over thirty years. But then on the flip end of it, you have the issuers as well who are contending with a tougher market environment. Yeah. Shruti, what are you seeing from your end? Because your reporting shows that we are still seeing some deals get done, specifically in Chicago. Yeah. So in terms of the issuer, standpoint, we're talking about state and local governments that are borrowing money. So the last couple of days, Aashna and I have been talking to a lot of people who, have seen that deals have gotten pulled. Right? And so what does that mean? That they are, waiting until there's a a more, lucrative market for them because when the yields are going up, that just means that state and local borrowing costs are going up. So we've seen some deals being put on day to day, which just means that we're watching day to day to see when those deals come to market. Yeah. Aashna, tell us about some of the deals that you've been watching and just how the activity compares with what you would typically see in maybe a lower rate regime. Yeah. We've been dealing with a very high calendar volume in the muni, you know, the muni world. Lots of supply coming into the market, and a lot of the issuers who are planning to come to market this week, they're coming across this really tough market environment. So we reported on deals coming out of Los Angeles. That was about $1,800,000,000 convention center deal. We reported on, a toll road in Texas, some stuff in New Jersey. And so all of these deals were put on pause because these issuers are waiting for better market conditions and to come back hopefully. So like Shruti said, we're watching these day to day, seeing, you know, what happens. We saw a deal that was put on pause in Nashville, come back to the market yesterday that we reported on. So we'll be monitoring these deals to see what happens next. And then, Aashna, when you talk to the portfolio managers, the investors, what's the general consensus? Do they expect that these rates are going to continue to move higher? And if so, why get in now versus maybe just waiting until you can get an even juicier return? Yeah. So people we've been talking to have been saying that this is the cheapest, and our data shows the same thing. This is the cheapest munis have looked in a really long time. So investors are saying, this is why it's a great time to get in. It's a buying opportunity for investors who might be waiting. But at the same time, some people we talked to yesterday were saying, this might be... You know, the muni market might have sold off a little bit too much, and now we're seeing yields come down. We're seeing a little bit of correction in the market. So we'll be keeping a close eye talking to investors, talking to portfolio managers on what's gonna happen in the coming days. Shruti, I have to ask you about, this parking meter operation sale because it's so wonderful to see the different kinds of financings that we see in the muni bond market. Just give us the breakdown of what your reporting told us. Yeah. Sure. So city council here in Chicago earlier this week had a vote that was highly watched and, fairly controversial here in Chicago. This decision actually, is rooted in a lease that, mayor Daley had originated in 2008 when the city of Chicago was facing dire financial situations, and they leased the... About 36,000 parking meters here in Chicago for about seventy five years. Now the city council doesn't necessarily have a say in the contract negotiations once that lease was, sold. But something came up this past year where the lease was gonna be transferred from a Morgan Stanley led consortium to another investor group. And so the city council saw this as an opening to make, as many of them have said, lemonade out of lemon. So they have asked and did receive some financial, incentives for their approval. And so the... This particular vote was earlier this week, and it passed about 46 to three. After months of negotiations and months of delays, the city council has negotiated where the city is gonna get a $75,000,000 upfront payment and some cuts going into the future if another deal happens where this asset is sold and some profit sharing going into the future. This money is intended to go towards the very un... Underfunded pensions here in the city of Chicago.