Municipal bond traders will be waiting for the primary market to gear up on Tuesday as they eye yields, which have been plunging to record low levels.
Secondary Market
U.S. Treasuries were mixed on Tuesday. The yield on the two-year Treasury rose to 0.62% from 0.60% on Monday, while the 10-year Treasury yield was unchanged from 1.46% and the yield on the 30-year Treasury bond decreased to 2.27% from 2.28%.
Top-quality municipal bonds ended stronger on Monday. The yield on 10-year benchmark muni general obligation fell seven basis points to 1.29% from 1.36% on Friday, while the 30-year muni yield declined eight basis points to 2.00% from 2.08%, according to the final read of Municipal Market Data's triple-A scale.
Monday's reads were again the lowest ever for munis since MMD began calculating them in 1980.
The 10-year muni to Treasury ratio was calculated at 88.5% on Monday compared to 86.3% on Friday, while the 30-year muni to Treasury ratio stood at 87.6% versus 85.8%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 30,336 trades on Monday on volume of $9.37 billion.
Primary Market
Total volume for this week is estimated at $8.18 billion, consisting of $5.92 billion of negotiated bond deals and $2.26 billion of competitive sales.
On Tuesday, Washington state is competitively selling four separate issues totaling $1.3 billion.
The deals consist of $535.125 million of various purpose general obligation refunding bonds, $392.27 million of various purpose GOs and $272.47 million of motor vehicle fuel tax GO refunding bonds and $101.35 million of GO taxables.
All of the deals are rated Aa1 by Moody's and AA-plus by S&P and Fitch Ratings.
Since 2006, the Evergreen State has issued about $29.5 billion of debt, with the largest issuance occurring in 2012 when it sold $3.5 billion of securities. The state has issued over $1 billion every year since 2006 and has issued at least $2 billion every year since 2008, and will surpass that mark for this year with Tuesday's sales. The lowest amount the state has sold in that period was in 2006 when it came to market with $1.6 billion.
In the negotiated sector on Tuesday, Bank of America Merrill Lynch is slated to price San Antonio, Texas' $564 million of Series 2016 electric and gas system revenue refunding bonds. The deal is rated Aa1 by Moody's, AA by S&P and AA-plus by Fitch.
Also this week, the commonwealth of Massachusetts will be selling three separate negotiated deals, totaling roughly $891 million.
BAML is slated to price the state's $441 million of Series 2016B GO refunding bonds on Wednesday, following a one-day retail order period on Tuesday. BAML will also price $250 million of GO consolidated loan of 2016 Series F taxable GO green bonds on Wednesday.
Additionally, Barclays is scheduled to price Massachusetts' $200 million of GO consolidated loan of 2014 Series D multi-modal bonds and Subseries D-1 bonds on Wednesday. All three deals carry ratings of Aa1 by Moody's and AA-plus by Fitch.
On Tuesday, the Board of Regents of the Texas A&M University System is coming to market with two sales totaling $381.8 million.
Morgan Stanley is expected to price the board's $205.9 million of Series 2016C revenue financing system revenue bonds while Wells Fargo Securities is set to price the board's $175.9 million of Series 2016D taxable revenue financing system bonds.
JPMorgan Securities is set to price the state of Texas' $149.63 million of GOs in seven series of tax-exempt and taxable bonds. The deal is rated triple-A by Moody's, S&P and Fitch.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $117.6 million to $10.11 billion on Tuesday. The total is comprised of $3.05 billion of competitive sales and $7.06 billion of negotiated deals.
