Top-rated municipal bonds ended unchanged on Friday, traders said, as the market looked ahead to a larger new issue slate in the week ahead.
Ipreo estimates total volume for coming week at $7.49 billion, up from a revised total of $4.61 billion in the past week, according to updated data from Thomson Reuters. The new calendar is composed of $6.13 billion of negotiated deals and $1.36 billion of competitive sales.
Topping the slate is a $1.15 billion deal from the Trustees of California State University. Goldman Sachs is set to price the taxable and tax-exempt systemwide revenue bonds for institutions on Wednesday. The deal is rated Aa2 by Moody's Investors Service and AA-minus by S&P Global Ratings.
On Wednesday, Citigroup is expected to price the Salt Lake Department of Airports' $952 million of airport revenue bonds, consisting of Series 2017A bonds subject to the alternative minimum tax and Series 2017B non-AMT bonds. The deal is rated A2 by Moody's and A-plus by S&P.
"While there is no current debt outstanding, the new borrowing is significant in size and is part of an overall $2.2 billion terminal redevelopment program, and an additional $740 million concourse project," said Eric Kazatsky, Janney's director of municipal credit research. "Of note, the new buildings will be designed to meet the highest LEED standards from the U.S. Green Building Council, and could be a fit for ESG [environmental, social and governance] mandates, even though they are not labelled 'green.' "
On Friday, Citi began the first of a two-day retail order period for New York City's $800 million of Fiscal 2017 Series C and D general obligation bonds ahead of the institutional pricing on Tuesday.
The $781.37 million of Fiscal 2017 Series C bonds were priced for retail to yield from 1.29% with 3% and 5% coupons in a split 2019 maturity to 2.85% with a 5% coupon in 2028; a 2018 maturity was offered as a sealed bid.
The $18.73 million of Fiscal 2017 Series D bonds were priced for retail to yield from 1.29% with a 3% coupon in 2019 to 3.05% with a 3% coupon in 2029; the 2017 and 2018 maturities were offered as sealed bids.
The deal is rated Aa2 by Moody's and AA by S&P and Fitch.
Citi is also expected to price the state of Oregon's $491 million of tax-exempt and taxable GOs for state seismic and energy projects. The taxables are seen being priced on Tuesday while the tax-exempts are set for Wednesday. The deal is rated Aa1 by Moody's and AA-plus by S&P and Fitch.
In the competitive arena, the biggest bond sale is coming from the Fairfax County Water Authority, Va., which is selling $198.58 million of water revenue and refunding revenue bonds on Thursday. The deal is rated triple-A by Moody's, S&P and Fitch.
In the short-term competitive sector, the New York Metropolitan Transportation Authority is set to sell $700 million of notes in two separate sales on Wednesday. The offerings consist of $500 million of Series 2017 Subseries 2017A-1 transportation revenue bond anticipation notes and $200 million of Series 2017 Subseries 2017B-1 transportation revenue bond anticipation notes. The BANs are rated MIG1 by Moody's, SP1-plus by S&P and F1 by Fitch.
Secondary Market
Municipals turned mixed on Friday and then settled back to steady after the release of the employment report for January. The Labor Department said that non-farm payrolls rose by 227,000 while the unemployment rate increased to 4.8%. Economists surveyed by IFR Markets had expected non-farm payrolls to have risen by 171,000 in January with the unemployment rate remaining at 4.7%.
The 10-year benchmark muni general obligation yield was unchanged from 2.33% on Thursday, while the yield on the 30-year GO was flat from 3.09%, according to the final read of Municipal Market.
U.S. Treasuries were weaker in late trade. The yield on the two-year Treasury rose to 1.21% from 1.20% on Thursday, while the 10-year Treasury gained to 2.49% from 2.47%, and the yield on the 30-year Treasury bond increased to 3.12% from 3.08%.The 10-year muni to Treasury ratio was calculated at 93.6% on Friday compared to 94.3% on Thursday, while the 30-year muni to Treasury ratio stood at 99.3%, versus 100.2%, according to MMD.
Week's Most Actively Traded Issues
Some of the most actively traded issues by type in the week ended Feb. 3 were from Illinois and New York,
In the GO bond sector, the Chicago, Ill., 6s of 2038 were traded 37 times. In the revenue bond sector, the New York City Municipal Water Finance Authority 5s of 2047 were traded 134 times. And in the taxable bond sector, the Westchester County, N.Y., 1.5s of 2017 were traded 31 times.
Week's Most Actively Quoted Issues
Oregon, Maryland and California names were among the most actively quoted bonds in the week ended Feb. 3, according to Markit.
On the bid side, the Portland, Ore., taxable 6.046s of 2020 were quoted by 1,541 unique dealers. On the ask side, the Maryland Health and Higher Educational Facilities Authority revenue 3.75s of 2036 were quoted by 267 unique dealers. And among two-sided quotes, the Los Angele USD, Calif., taxable 5.755s of 2029 were quoted by 24 unique dealers.
Lipper: Muni Bond Funds Report Inflows
Municipal bond funds attracted inflows again as investors continued their cautious return to the market, according to Lipper data released late Thursday. The weekly reporters saw $14.047 million of inflows in the week ended Feb. 1, after inflows of $6.980 million in the previous week.
The four-week moving average remained in the green at positive $376.734 million, after being positive at $145.238 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 had inflows, gaining $17.375 million in the latest week after gaining $239.931 million in the previous week. Intermediate-term funds had outflows of $18.018 million after outflows of $140.103 million in the prior week.
National funds had outflows of $31.490 million after inflows of $630 million in the previous week. High-yield muni funds reported inflows of $187.718 million in the latest reporting week, after inflows of $197.757 million the previous week.
Exchange traded funds saw outflows of $70.187 million, after outflows of $147.402 million in the previous week.
