Top-rated municipal bonds finished flat on Monday, traders said, as the largest deal of the week hit the market.
JPMorgan Securities priced the state of California's $2.7 billion of various purpose general obligation and GO refunding bonds for retail investors on Monday. The deal will be offered to institutions on Tuesday.
The $615 million of GOs were priced to yield from 0.59% with a 3% coupon in a split 2018 maturity to 0.82% with a 3% coupon in a split 2020 maturity; and from 1.17% with a 3% coupon in 2022 to 1.61% with a 5% coupon in 2026; as 2s to yield 2.03% in 2028 and at par to yield 3% and as 5s to yield 2.29% in a split 2046 maturity. No retail orders were taken in the second half of the split 2018 or 2020 maturities or in the 2029 or 2030 maturities. A 2017 maturity was offered as a sealed bid.
The $2.09 billion of GO refunding bonds were priced to yield 0.59% with 4% and 5% coupons in a split 2018 maturity to 2.50% with a 4% coupon and 2.21% with a 5% coupon in 2036. No retail orders were taken in 2029-2030, the second half of the split 2031 or in two parts of the triple split 2032, 2033-2035, or 2037 maturity. A split 2017 maturity was offered as sealed bids.
The issue is rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.
The deal marks the second time this year that the Golden State has issued a multi-billion dollar bond deal.
In March, the state sold $2.95 billion of GOs, in the largest bond deal of 2016. Buyer demand drove the state to increase the size of that sale by about $600 million. Citigroup priced the sale in four series, with the highest yield coming in at 3.40% in 2045.
Bank of America Merrill Lynch set to price the Illinois Finance Authority's $500 million of state clean water initiative revolving revenue bonds on Tuesday.
The IFA's state revolving fund bonds will pave the way more low cost loans for local clean water and drinking water projects. The deal is rated triple-A by S&P and Fitch.
Siebert Cisneros Shank will price the New York State Environmental Facilities Corp.'s $130 million of state revolving funds revenue green bonds for the 2010 Master Financing Program. The issue, which consists of tax-exempts and taxables, is expected to be priced on Tuesday.
The largest competitive deal of the week is coming from the state of Louisiana, which will offer $169 million of Series 2016D GOs on Tuesday.
The deal is rated Aa3 by Moody's, AA by S&P and AA-minus by Fitch.
Secondary Market
The yield on the 10-year benchmark muni general obligation was unchanged from 1.42% on Friday, while the yield on the 30-year was steady at 2.12%, according to the final read of Municipal Market Data's triple-A scale.
U.S. Treasuries were stronger on Monday. The yield on the two-year Treasury dropped to 0.81% from 0.84% on Friday, the 10-year Treasury yield declined to 1.56% from 1.63% and the yield on the 30-year Treasury bond decreased to 2.22% from 2.29%.
The 10-year muni to Treasury ratio was calculated at 90.7% on Monday compared to 87.0% on Friday, while the 30-year muni to Treasury ratio stood at 95.7% versus 92.4%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 30,872 trades on Friday on volume of $10.21 billion.
Prior Week's Actively Traded Issues
Revenue bonds comprised 50.02% of new issuance in the week ended Aug. 26, down from 51.04% in the previous week, according to Markit. General obligation bonds comprised 36.98% of total issuance, down from 40.04%, while taxable bonds made up 12.50%, up from 8.92%.
Some of the most actively traded issues by type were from Arizona, California and Illinois issuers, In the GO bond sector, the Phoenix 5s of 2026 were traded 32 times. In the revenue bond sector, the California HFFA 3s of 2047 were traded 77 times. And in the taxable bond sector, the Illinois 5.1s of 2033 were traded 41 times.
Previous Week's Top Underwriters
The top negotiated and competitive underwriters of last week included Citigroup, Bank of America Merrill Lynch, Goldman Sachs, JPMorgan Securities and Barclays Capital Markets, according to Thomson Reuters data. In the week of Aug. 21-Aug. 27, Citi underwrote $1.2 billion, BAML $1.1 billion, Goldman $853 million, JPMorgan $727 million and Barclays $695 million.
