The municipal bond market looks ahead to almost $12 billion in new supply this week as the end of the year looms.
Primary Market
There are about $11.8 billion of municipal bond sales scheduled for the week, according to Ipreo and The Bond Buyer. Negotiated bond deals total $10.0 billion while competitive sales total $1.8 billion.
- Morgan Stanley is scheduled to price the Los Angeles Community College District's $1.3 billion general obligation and general obligation refunding bonds. The bonds are rated Aa1 by Moody's Investors Service and AA-plus by Standard & Poor's. The deal is comprised of new-money and refunding bonds.
- California's Bay Area Toll Authority will bring $731 million of revenue debt to market on Tuesday when Bank of America Merrill Lynch prices the deal with senior and subordinate debt. The larger of the series consists of $431 million of San Francisco Bay Area toll revenue senior lien bonds structured as Series D and Series 3 term-rate bonds, and Series G and H index-rate bonds. That portion of the deal will be offered to retail investors during a retail order period on Monday, following by an institutional pricing on Tuesday, and the bonds are rated Aa3 by Moody's, AA by Standard & Poor's, and AA-minus by Fitch. The $300 million subordinate toll bridge revenue bonds in Series S6 meanwhile, will be priced on Tuesday by Citigroup Global Markets and is structured as a bullet maturity in 2054 and rated A1 by Moody's and A-plus by Standard & Poor's.
- Bank of America Merrill Lynch is slated to price the California Statewide Communities Development Authority's tax-exempt and taxable bonds for the Loma Linda University Medical Center. The deal is rated BBB by Standard & Poor's and BBB-minus by Fitch Ratings and will be priced on Tuesday with a structure that consists of $550 million of 2014 A tax-exempt debt and $100 million of 2014 B taxable bonds.
- Morgan Stanley is scheduled to price the Harris County-Houston Sports Authority's $569 million tax-exempt and taxable senior lien revenue refunding bonds and second lien revenue refunding bonds. The deal will consist of senior and second lien bonds in three series. Series 2014 A totals $458.43 million of tax-exempt senior lien revenue refunding bonds, while Series 2014 B consists of $33.19 of taxable senior lien revenue refunding bonds. Series 2014 C is comprised of $77.28 million of second lien revenue refunding debt. Series 2014 A and B are rated A2 by Moody's and A-minus by Standard & Poor's, and Series 2014 C is rated A3 by Moody's and BBB by Standard & Poor's.
- Wells Fargo Securities is set to price Dallas' $530 million general obligation and refunding bonds. The bonds are rated Aa1 by Moody's and AA-plus by Standard & Poor's, and are structured as serial bonds maturing from 2015 to 2034.
- Bank of America Merrill Lynch will price $412 million Northeast Ohio Regional Sewer District wastewater improvement revenue and refunding bonds. The bonds are rated Aa1 by Moody's and AA-plus.
- Suffolk County, N.Y., will sell $410 million of tax anticipation notes in a Citi-led deal. The notes are rated SP1 by Standard & Poor's and F1 by Fitch.
- JPMorgan Securities will price New York City Housing Development Corp.'s $$344 million fixed-rate revenue bonds, structured as serial bonds maturing from 2015 to 2048. The issue is rated Aa2 by Moody's and AA-plus by Standard & Poor's.
Secondary Market Trading
On Monday, Treasury yields were mixed with the two-year note yield at 0.64%, unchanged from Friday. The 10-year yield slipped to 2.30% from 2.31% while the 30-year decreased to 2.95% from 2.97% on Friday.
On Friday, high-grade municipal bond yields were higher. The yield on the benchmark 10-year general obligation rose three basis points to 2.09% from 2.06% at Thursday's close while the yield on 30-year GOs rose two basis points to 3.00% from 2.98%, according to the final read of MMD's triple-A scale.
On Friday, the 10-year muni-to-Treasury ratio closed at 90.6% versus 91.6% on Thursday; the 30-year muni to Treasury ratio closed at 101.2%, compared with 101.0% on Thursday.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 34,534 trades on Friday for volume of $8.745 billion. Most active on Friday, based on the number of trades, was Connecticut refunding, Series H, 5s of 2025, which traded 115 times with an average price of 123.776 and an average yield of 2.5%. The second most active issue was the Long Island Power Authority electric system revenue, Series A, 4s of 2039, which traded 114 times with an average price of 101.06 and an average yield of 3.869%.
