Prices of top-quality municipal bonds were slightly weaker at mid-day, according to traders with yields on some maturities strengthening as much as three basis points.
Market participants are eagerly awaiting a surge in supply this week and the action got started right away on Monday, with a competitive deal from Florida and a negotiated deal from an issuer in Texas.
Secondary Trading
The yield on the 10-year benchmark muni general obligation on Monday was as much as two basis points higher from 1.98% on Friday, while the yield on the 30-year GO was also up by as much as three basis points from 3.02%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were lower on Monday morning, with the yield on the two-year Treasury note rising to 0.60% from 0.58% on Friday, while the 10-year yield climbed to 2.04% from 2.00% and the 30-year yield increased to 2.88% from 2.83%.
The 10-year muni to Treasury ratio was calculated on Friday at 99.9% versus 99.8% on Thursday, while the 30-year muni to Treasury ratio stood at 107.1% compared to 106.8%, according to MMD.
Primary Market
This week's calendar is composed of $6.9 billion of negotiated deals and $1.8 billion of competitive sales.
The action got started right away, as Florida Department of Transportation competitively sold $195.92 million of turnpike revenue refunding bonds, Series 2015B. Bank of America Merrill Lynch won the bidding war with a true interest cost of 3.15%.
The bonds were priced to yield from 0.58% with a 5% coupon in 2017 to 3.56% with a 4% coupon in 2036. The deal, which has previously on the day-to-day calendar, is rated Aa3 by Moody's Investors Service and AA-minus by Fitch Ratings.
The Florida DOT last sold $227.56 million of turnpike revenue bonds, Series 2015A on June 30, when JP Morgan won the bidding war with a true interest cost of 3.58%.
Wells Fargo Securities preliminary priced the Spring Branch Independent School District, Tx.'s $217.675 million of limited tax refunding bonds, Series 2015A and unlimited tax refunding bonds, Series 2015B on Monday.
The Series A bonds for $65.935 million were priced to yield 0.18% with a 2% coupon in 2016 and to yield 0.77% with a 5% coupon in 2018. The bonds were also priced to yield from 1.01% with a 5% coupon in 2019 to 2.17% with a 5% coupon in 2025.
The Series B bonds for $151.74 million were priced to yield from 0.47% with a 5% coupon in 2017 to 3.46% with a 4% coupon in 2036. A 2038 term bond was priced as 4s to yield 3.54%. The 2016 maturity was offered as a sealed bid.
Market participates have their eyes on the two mega deals this week, as both the Port Authority of New York and New Jersey and Chicago's O'Hare International Airport will both be coming with roughly $2 billion issues. Those are pricing Thursday and Wednesday, respectively.
Before we get there, Tuesday will give the primary its' first jolt of new issuance, as three large negotiated deals and one sizeable competitive offering will be pricing.
Citi is expected to price the Texas Water Development Board's $790 million of state water implementation revenue bonds, Series 2015 A and B.
Bank of America Merrill Lynch will price the District of Columbia Water and Sewer Authority's $350 million of public utility subordinate lien revenue bonds, Series 2015 A - which are green bonds and 2015 B. A retail order period will be held today. The deal is rated Aa3 by Moody's, AA by Standard and Poor's and AA-minus by Fitch.
In the competitive sector on Tuesday, San Francisco will be auctioning off $226 million of GO bonds and Louisville and Jefferson County Metropolitan Sewer District will sell $257.1 million of revenue bonds.
Previous Week's Most Actively Traded Issues
Revenue bonds comprised 56.13% of new issuance in the week ended Sept. 25, down from 56.88% in the previous week, according to Markit. General obligation bonds comprised 36.05% of total issuance, up from 33.98%, while taxable bonds made up 7.82%, down from 9.14%
Some of the most actively traded issues in the week were in Florida and Pennsylvania.
In the revenue bond sector, the Miami-Dade County, Fla., Educational Facilities Authority 4s of 2045 were traded 86 times. In the GO bond sector, the Reading School District, Pa., 4 1/8s of 2036 were traded 57 times. And in the taxable bond sector, the Miami-Dade County, Fla., Educational Facilities Authority 5.073s of 2050 were traded 30 times, Markit said.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 33,354 trades on Friday on volume of $8.977 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $1.04 billion to $15.52 billion on Monday. The total is comprised of $4.25 billion competitive sales and $11.27 billion of negotiated deals.
