Texas, Washington, and Colorado issuers highlight the calendar for the coming holiday-shortened week after municipal bonds strengthened on Friday.
Yields were as many as two basis points lower in some maturities, according to traders.
Primary Market
Municipal volume for the week ahead is estimated by Ipreo at $6.2 billion, up from a revised total of $5.9 billion sold in the past week, according to Thomson Reuters. The calendar consists of about $5.5 billion of negotiated deals and $723 million of competitive sales.
"It's a respectable negotiated calendar given the abbreviated week," as the Good Friday holiday will mean wrapping up the week's business Thursday afternoon, said Gary Binkiewicz of R. Seelaus and Co.
Loop Capital Markets will price the week's biggest deal on Tuesday, a $582 million offering from Houston. The public improvement refunding bond is expected to be mostly for refunding. It is anticipated that the deal will mature serially from 2019 through 2038. The deal is rated Aa3 by Moody's Investors Service and AA-plus by Standard and Poor's, following a one-notch downgrade by Moody's earlier this week due to fiscal strains and a depressed energy market.
"There will likely be some nominal costs associated with this downgrade in the form of slightly higher interest rates for our planned refinancing," Houston Mayor Sylvester Turner said of the downgrade on March 17. The city still expects net present value savings of about $48 million on the $493 million of refunding.
Binkiewicz said the downgrade isn't likely to curb appetite for Houston's bonds.
"They're going to be well-received," he said. "I don't look for that to be a huge impediment to the deal."
Bank of America Merrill Lynch is set to price $497 million of refunding bonds March 23 for Washington State-based Energy Northwest. The deal will consist of both taxable and tax-exempt bonds sold to retire existing debt on three different projects, though less than $10 million of the securities will be taxable. The bonds are rated Aa1 by Moody's, AA-minus by S&P, and AA by Fitch Ratings.
Tuesday will also see Citigroup will bring $353 million of city and County of Denver, Colo., tax revenue refunding bonds to market. The deal will feature $235 million of tax-exempt bonds and $218 million of taxable securities. The bonds are rated Aa3 by Moody's and AA-minus by S&P.
Secondary Market
The yield on the 10-year benchmark muni general obligation fell two basis points Friday to 1.83% from 1.85% on Thursday, while the 30-year muni yield dipped one basis point to 2.79% from 2.80%, according to the final read of Municipal Market Data's triple-A scale.
On Friday, March 11, the yield on the 10-year muni stood at 1.89% while the yield on the 30-year muni was at 2.86%.
U.S. Treasuries were stronger on Friday. The yield on the two-year Treasury dropped to 0.84% from 0.87% on Thursday, while the 10-year Treasury yield declined to 1.87% from 1.90% and the 30-year Treasury bond yield decreased to 2.67% from 2.69%.
The 10-year muni to Treasury ratio was calculated on Friday at 97.7% compared to 97.3% on Thursday, while the 30-year muni to Treasury ratio stood at 104.3% versus 103.9%, according to MMD.
The Week's Most Actively Quoted Issues
California issues were among the most actively quoted bonds in the week ended March 18, according to data released on Friday by Markit.
On the bid side, the California taxable 7.55s of 2039 were quoted by 14 unique dealers. On the ask side, the California GO 4s of 2036 were quoted by 16 unique dealers. And among two-sided quotes, the California taxable 7.55s of 2039 were quoted by 13 dealers.
The Week's Most Actively Traded Issues
Some of the most actively traded issues by type in the week ended March 18 were in California and New York, according to Markit.
In the GO bond sector, the California 3s of 2033 traded 49 times. In the revenue bond sector, the New York City Transitional Finance Authority 4s of 2045 traded 132 times. And in the taxable bond sector, the California 7.55s of 2039 traded 23 times, Markit said.
Muni Bond Funds See Inflows for 24th Straight Week
Municipal bond funds reported inflows for the 24th week in a row, according to Lipper data released late Thursday. Weekly reporting funds saw $780.007 million of inflows in the week ended March 16, after inflows of $518.253 million in the previous week, Lipper said.
The four-week moving average remained positive at $551.727 million after being in the green at $523.966 million in the previous week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds also experienced inflows, gaining $522.398 million in the latest week after inflows of $276.208 million in the previous week. Intermediate-term funds had inflows of $230.746 million after inflows of $201.549 million in the prior week.
National funds saw inflows of $617.603 million after inflows of $492.834 million in the prior week. High-yield muni funds reported inflows of $229.613 million in the latest reporting week, after inflows of $151.240 million the previous week.
Exchange traded funds saw inflows of $104.430 million, after inflows of $67.895 million in the previous week.
