Top-quality municipal bonds finished flat on Monday, traders said, as the state of Connecticut offered over $500 million of its tax-exempt securities to retail investors ahead of the institutional pricing on Tuesday.
The yield on the 10-year benchmark muni general obligation was unchanged from 1.63% on Friday while the 30-year muni yield was steady at 2.43%, according to the final read of Municipal Market Data's triple-A scale.
U.S. Treasuries were narrowly mixed on Monday. The yield on the two-year Treasury was unchanged from 0.89% on Friday, while the 10-year Treasury yield declined to 1.83% from 1.85% and the yield on the 30-year Treasury bond decreased to 2.63% from 2.64%.
The 10-year muni to Treasury ratio was calculated at 88.7% on Monday compared to 88.3% on Friday, while the 30-year muni to Treasury ratio stood at 92.5% versus 92.2%, according to MMD.
Bank of America Merrill Lynch priced the state of Connecticut's $512.88 million of Series 2016B general obligation refunding bonds for retail investors ahead of the institutional pricing on Tuesday.
The issue was priced to yield from 1.14% with 4% and 5% coupons in a split 2019 maturity to 2.35% with 4% and 5% coupons in a split 2027 maturity. A 2018 maturity was offered as a sealed bid.
Connecticut's GOs are rated Aa3 by Moody's Investors Service, AA-minus by S&P Global Ratings and Fitch Ratings, and AA by Kroll Bond Rating Agency.
Muni traders are set to see $7.7 billion of new issues come to market this week, with $5.44 billion of negotiated deals and $2.23 billion of competitive sales on tap.
On Tuesday, PNC Capital Markets is set to price the Pennsylvania Turnpike Commission's $545.14 million of second series of 2016 subordinate revenue refunding bonds. The deal is rated A3 by Moody's and A-minus by Fitch.
RBC Capital Markets is expected to price the Massachusetts Educational Financing Authority's $340 million of Series 2016 Issue J education loan revenue bonds, subject to the alternative minimum tax. The deal is rated AA by S&P and A by Fitch.
RBC is also set to price Miami-Dade County, Fla.'s $339.34 million of GOs for the building better communities program. The bonds are rated Aa2 by Moody's and AA by S&P.
In the competitive arena on Tuesday, In the competitive arena on Tuesday, the Florida Board of Education is selling $241.69 million of Series 2016A lottery revenue refunding bonds. The deal is rated A1 by Moody's, triple-A by S&P and AA by Fitch.
Denton, Texas, is selling $112.19 million of securities on Tuesday in two separate sales consisting of $83.23 million of Series 2016 certificates of obligation and $28.96 million of Series 2016 GO refunding and improvement bonds. Both deals are rated AA-plus by S&P and Fitch.
Prior Week's Actively Traded Issues
Revenue bonds comprised 53.32% of new issuance in the week ended May 20, up from 53.27% in the previous week, according to data
General obligation bonds comprised 39.62% of total issuance, up from 38.98%, while taxable bonds made up 7.06%, down from 7.75%.
Some of the most actively traded issues by type were from Puerto Rico and New York issuers.
In the GO bond sector, the Puerto Rico commonwealth 8s of 2035 traded 44 times. In the revenue bond sector, the New York TDC LaGuardia 5s of 2046 traded 139 times. And in the taxable bond sector, the New York TDC LaGuardia 3.673s of 2030 traded 30 times, Markit said.
Previous Week's Top Underwriters
The top negotiated and competitive underwriters of last week included Citigroup, BAML, Piper Jaffray, Goldman Sachs and RBC Capital Markets, according to Thomson Reuters data. In the week of May 15-21, Citi underwrote $3.07 billion, BAML $2.05 billion, Piper had $986 million, Goldman did $811 million and RBC had $773 million.
N.Y. MTA Saw $39M in Savings on Green Bond Sale
The New York Metropolitan Transportation Authority saw $39 million of present value savings from last week's sale of $588 million of Series 2016B dedicated tax fund green bonds, the MTA revealed at its Finance Committee meeting on Monday.
The savings in the refunding portion of the sale amounted to 21% and will pay off outstanding Series 2015A bond anticipation notes.
Jonathan Ballan, an MTA Board Member and head of the New York public finance group at law firm Dentons, lauded the authority for coming to market with a large sale during a period of record low yields.
"I hope to see you do as many as refunding as possible," he said at Monday's meeting.
The bonds were freed to trade and Monday and the sale will formally close on Thursday, the MTA said.
Bank of America Merrill Lynch was senior book-running manager on the sale; co-senior managers included Loop Capital Markets, Siebert Brandford Shank, Morgan Stanley and Drexel Hamilton.
MTA officials also said that the process for picking new underwriting groups was currently in the evaluation phase and recommendations would likely be made to the full board at its September meeting.
After the underwriter selection process is complete, the MTA will begin the process of selecting new financial advisors.
