Tuesday's primary calendar promises to bring more volume in one day than the market has seen in weeks. The state of California and New York City each will price a $2 billion deal for institutional buyers after successful retail order periods. Below, your playbook to attack the day.
Primary
- JP Morgan Securities will price the remaining New York City sales tax asset revenue, or STAR, bonds for institutional sale on Tuesday following a two-day order period that ended Monday. Roughly half of the $2 billion will be left over, after placing $480 million of the debt into retail markets on Friday and another $300 million to $400 million on Monday. The bond has a single series, with serialized maturities ranging from 2017 to 3033. Each maturity contains multiple coupons, ranging from 3% to 5%, to attract both a retail investor and an institutional. The bonds are expected to price through the Municipal Market Data triple-A 5% curve after pricing at a slim 20 basis point spread to MMD in retail. The deal is rated Aa1 by Moody's Investor Service and triple-A by Standard & Poor's.
- Wells Fargo Securities will price a $2 billion deal for the state of California on Tuesday. These general obligation various purpose bonds come in four separate series, with a $954.5 million refunding tranche, $937 million new money, $200 million in "green" GO bonds, and another $200 million series with a mandatory put in December 2019. The deal opens for institutional buyers on Tuesday after a successful three-day retail order period. A spokeswoman for the California state Treasurer wrote in an email that retail was really "eating it up" and on Thursday $582 million, or 25.4% of the total deal, had already been sold. The deal is rated Aa3 by Moody's and A by Standard & Poor's.
Secondary
Traders expected New York issuers and California general obligation paper would be the market movers in the secondary on Tuesday as portfolio managers made room to welcome the new deals.
Scales
As of 9:57 a.m. on Tuesday, the MMD triple-A curve opened steady to slightly stronger. Bonds maturing between 2015 through 2018 were unchanged as those maturing between 2022 and 2044 tightened up to one basis point.
Treasuries
The front end of the U.S. Treasury curve strengthened on Tuesday morning following a U.S. airstrike in Syria. The two-year note fell four basis points to 0.54% compared to Monday's close, while the 10- and 30-year fell two and one basis points respectively from Monday's close. The 10-year was at 2.55% Tuesday morning while the 30-year was at 3.27%.
