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Taxable calendar rises to 1/3 of market

By Lynne Funk Gary Siegel Christine Albano

Even as taxables and refundings took a back seat to new-money tax-exempts throughout August and September, their presence is growing on the forward calendar as issuers who may have been waiting for Washington to once again allow advanced refundings saw that possibility fade quickly.

As the fourth quarter officially began Friday, demand remains heavy, and many on the buy-side are awaiting upcoming investment opportunities as issuance grows.

“Its been a long time since portfolio managers heard from underwriters that they are having issues getting deals done,” according to John Mousseau, chief executive officer and director of fixed income at Cumberland Advisors, noting that could forecast some potential weakness going forward.

“I think anything that smells like bargain yields compared to a few months ago" will be in high demand, Mousseau said.

His colleague, Shaun Burgess, portfolio manager and analyst at Cumberland, agreed there is a more constructive tone on the municipal side than on their taxable counterparts.

“We remain cautious in the face of [recent volatility] as well as increasing supply as we head into the fall,” Burgess said.

“We are keeping a careful eye on fund flows and demand as we head into another robust calendar to help derive some sense of directionality in the municipal space,” he said.

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