16Rock Asset Management

Munis little changed; mutual funds see another $1 billion-plus inflows The Bond Buyer | Jessica Lerner (…) The muni market is “well-positioned for strategic opportunities, with strong inflows driven by the current narrative and eased secondary selling pressure,” said JAMES PRUSKOWSKI, chief investment officer at 16Rock Asset Management. Buyers, he noted, are focused on “securing book income purchased during a higher rate regime and there is a growing reluctance to pay taxes on gains from tax-exempt bonds.” Despite record supply, Pruskowski said demand remains high, with “too much cash chasing too few bonds.” “Muni-UST valuations largely reflect the current risk landscape,” he said. “An election-related supply pause sets the stage for a strong year-end finish,” Pruskowski said. Tax policy will be a “key” focus next year, “creating a positive tailwind, as individual tax provisions of the 2017 Tax Cuts and Jobs Act sunset at the end of next year,” he said. “Meanwhile, federal debt, deficit, and lower growth odds present significant challenges regardless of the election outcome,” he said. “Since TCJA, ten states and five cities have raised individual income tax rates, and the 3.8% Obamacare surtax on investment income remains,” according to Pruskowski. “Credit fundamentals are strong, supported by record tax collections, reduced pension liabilities due to strong investment returns, and high reserve fund balances, with prudent management practices leading to better outcomes,” he said. “Safe-haven flows will benefit municipal bonds despite a peak in the rating cycle.” https://lnkd.in/e4AGCjpK #municipalbonds #fomc #credit #strategy #opportunity #taxes

Americas Municipals Weekly Primary Review / Build America Bonds Tracker Primary Market Expects $10B in Supply Heading Into Labor Day Weekend; Investors Show Ample Interest in High-Yield Munis Reorg | Hoa P. Nguyen The primary market is expecting $9.8 billion in supply going into the Labor Day weekend, according to the new issue calendar on EMMA. “New issues are getting decent traction, but price bumps from initial guidance have been minimal, reflecting the sluggish late-summer market,” said JAMES PRUSKOWSKI, chief investment officer at 16Rock Asset Management. He added that the accelerated supply because of the election-related factors and broader macroeconomic influences has made this August “the most volatile for rates since 2011.” “Muni-Treasury ratios have largely priced in the market’s risk landscape, while retail demand has been gradually rising as we near September’s Federal Open Market Committee meeting,” JAMES PRUSKOWSKI said. “That demand is skewing towards long-duration and high-yield products, creating a bullish catalyst heading into [this] week.” #municipalbonds #supply #fomc #volatility

VRDOs tick up in 1H 2024 The Bond Buyer | Jessica Lerner (…) VRDOs may be a "short-term solution" for issuers to refinance when the Fed starts cutting rates, said JAMES PRUSKOWSKI, chief investment officer at 16Rock Asset Management. And "when rates start declining, that seems to be a good economic tradeoff for municipalities, as opposed to locking in today's higher absolute levels on longer-term debt," he said. It's also helpful that there's a record amount of money sitting in money market accounts, and market participants are utilizing the liquidity of that demand base, Pruskowski said. "As the Fed begins to cut interest rates, that's going to be confirmation for that money to begin to step out and get reinvested, not just in munis, but equities as well," he said. "And that provides the liquidity and opportunity as rates decline and demand increases in longer-term debt refinance out." (…) Pruskowski noted VRDO issuance has "fallen out of favor" due to the inversion of the yield curve and long-term rates are tighter than historical highs. Issuers are now funding their needs rather than "recycling" into flows and there is no budgetary pressure in terms of tax receipts and rainy day funds, he noted. Collections have been running at a "robust rate," alleviating pressure to finance any short-term needs, Pruskowski said. https://lnkd.in/eYYPvisf #municipalbonds #1H2024 #fomc #variableratedemandnotes

Former BlackRock Manager Gets 20% Return at Muni Bond Hedge Fund Bloomberg | Martin Braun - Pruskowski’s strategy beats debt markets, many hedge peers - Only about 25 US hedge funds focus on $4 trillion muni market JAMES PRUSKOWSKI learned the intricacies of the municipal bond market in his 30 years at BlackRock Inc., before exiting the world’s largest asset manager in 2023. He brought that expertise to another arcane part of Wall Street, the hedge fund industry, and produced market-beating results. Bloomberg Link: https://lnkd.in/ehuuDr_4 #municipalbonds #hedgefunds #performance #allocators

Munis weaker, outflows return The Bond Buyer | Jessica Lerner (...) Recent events have been a "roundtrip" for rates, starting with the sentiment shifting from slowing inflation to a softening labor market, said JAMES PRUSKOWSKI, chief investment officer at 16Rock Asset Management. However, there were other catalysts: Middle East tensions, the U.S. political climate and the "shock and awe event" of downbeat earnings from tech giants, which led to the big sell off, in addition to the Bank of Japan's rate hike, he said. The balance of this week's supply has been "pushed through" in a pretty volatile market at a time when there's too many things to focus on within the markets, causing some investors to pull back their bids, Pruskowski said. Retail, though, remains "engaged," he said, as new issues are clearing, albeit at an adjusted level. The asset class, both from a yield and ratio perspective, is still quite compelling, he said. "Other than a few short-term trading days of liquid to illiquid, the market seems to be performing quite nicely," Pruskowski said. https://lnkd.in/eUVm24_c. #municipalbonds #volatility #performance

US Soccer to Sell $200 Million of Debt for New Atlanta-Area Base Bloomberg | Maxwell Adler (…) “Soccer is on an upward trajectory in the US,” but it’s still growing at the professional level there, unlike in Europe where it’s well-established, said JAMES PRUSKOWSKI, chief investment officer at 16Rock Asset Management. “Today’s favorable market environment won’t hurt,” but investors will need to be wary of the risks, he said. https://lnkd.in/e3VYxzdY #municipalbonds #usa #mls #atlanta #credit

Tomorrow's Titans - Fifty Rising Stars 2024 The Hedge Fund Journal (Page 20) JAMES PRUSKOWSKI formed the 16Rock Asset Management company in 2023 with 16th Amendment Advisors LLC, which was incorporated in 2009 by Jed McCarthy and John Lee and runs multiple award-winning municipal bonds funds. In August 2023, the 16Rock Municipal Opportunities Fund LP was launched with capital of USD 5.1 million and the firm has grown to USD 233 million as of June 2024. The LP’s active, unconstrained, absolute return strategy aims to deliver all weather returns and is agnostic to US tax exempt benefits. It mainly focuses on investment grade opportunities in the USD 4 trillion municipal bond infrastructure asset class. In this fragmented market, supply, demand and public policy regularly throw up dislocations. Strategies include fundamental credit sector and security selection, secondary flow trading including new issues and technical events, basis between taxable munis, tax exempt munis, and treasuries; capital structure arbitrage and optionality. Leverage can be used and duration, yield curve and tail risks can be hedged. Pruskowski was previously managing director and CIO of municipal bonds, Institutional & Wealth Management at BlackRock, where his career began in 1994 in Risk & Quantitative Analytics and multi-sector taxable fixed-income portfolio Management. Pruskowski has a BS in Business Management from Fairleigh Dickinson University. https://lnkd.in/e2UPX__B #municipalbonds #hedgefunds #lps #allocators #performance

Biden dropping out may fuel market uncertainties; race tighter — asset managers Pensions & Investments | Palash Ghosh JAMES PRUSKOWSKI, chief investment officer at 16Rock Asset Management, noted that it's been almost 60 years since markets have faced an incumbent withdrawing from a presidential race, with President Lyndon B. Johnson the last to do so in 1968.   “Treasuries are inching higher as the market has new reason to assign lower odds of a Republican sweep heading into the Democratic convention, despite the party's commanding lead,” he said. “Political risk will be a key underlying factor leading up to the election, making it prudent to be long some duration and volatility now.”   16Rock Asset Management has $233 million in AUM. https://lnkd.in/e4ZJttFy #municipalbonds #election #volatility #trading

Munis little changed after Trump assassination attempt The Bond Buyer | Jessica Lerner Municipals were little changed Monday as the chance of former President Donald Trump being reelected increased following the assassination attempt over the weekend. U.S. Treasuries were weaker and equities were up. Financial markets are trying to "absorb" the outcome of higher odds of Trump winning in November and the news of his pick of Sen. J.D. Vance of Ohio as his running mate, said JAMES PRUSKOWSKI, chief investment officer at 16Rock Asset Management. (...) https://lnkd.in/eNAWZj3s. #municipalbonds #maga #usa #trump

Americas Municipals Weekly Primary Review / Build America Bonds Tracker Market Gears Up for Another High Volume Week Before Supply Dwindles in H2’24; Guam Power Authority Sells Refunding Revenue Bonds; Detroit Holds Competitive Sale Reorg | Hoa P. Nguyen (…) The overall negative market performance of the first half of 2024 continues to linger, but strong summer reinvestment demand has ushered in a turning point for the market, said JAMES PRUSKOWSKI, chief investment officer at 16Rock Asset Management. “We foresee a steady decline in supply into year-end, a regime shift towards lower rates, more focus on bond-friendly tax and infrastructure initiatives, and valuations that attract fresh capital,” JAMES PRUSKOWSKI said. #municipalbonds #tax #infrastructure #supply