Municipal bond traders on Tuesday are ready to face the week's $6.8 billion new issue slate, which consists of $4.7 billion of negotiated deals and $2.2 billion of competitive sales.
Secondary Market
U.S. Treasuries were weaker on Tuesday. The yield on the two-year Treasury rose to 1.17% from 1.14% on Monday, while the 10-year Treasury yield gained to 2.44% from 2.40%, and the yield on the 30-year Treasury bond increased to 3.01% from 2.99%.
Top-shelf municipal bonds finished slightly stronger on Monday. The 10-year benchmark muni general obligation yield was one basis point lower to 2.32% from 2.33% on Friday, while the yield on the 30-year GO was down one basis point to 3.05% from 3.06%, according to a final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated at 96.6% on Monday compared to 94.5% on Friday, while the 30-year muni to Treasury ratio stood at 102.0%, versus 100.5%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,065 trades on Monday on volume of $8.18 billion.
Primary Market
On Tuesday, the Metropolitan Government of Nashville and Davidson County, Tenn., is competitively selling $457.23 million of Series 2017 unlimited tax general obligation bonds.
The deal is rated Aa2 by Moody's Investors Service and AA by S&P Global Ratings.
Since 2007, the county has issued about $5.56 billion of debt, with the largest issuance occurring in 2010 when it sold roughly $1.2 billion of debt. The Music City did not come to market at all in 2009. With Tuesday's sale, it has already sold more bonds than it did in all of last year.
Also in the competitive arena, Fairfax County, Va., is selling $234.02 million of Series 2017A public improvement bonds. The deal is rated triple-A by Moody's, S&P and Fitch Ratings.
In the negotiated sector, RBC Capital Markets is set to price Philadelphia's $279.99 million of Series 2017 GO refunding bonds on Tuesday. The deal is rated A2 by Moody's, A-plus by S&P and A-minus by Fitch.
JPMorgan Securities is expected to price the Rector and Visitors of the University of Virginia's $229.93 million of Series 2017A general revenue pledge refunding bonds on Tuesday. The deal is rated triple-A by Moody's, S&P and Fitch.
Citigroup is set to price the Kentucky State Property and Building Commission's $224 million of Project 115 revenue bonds on Tuesday. The deal is rated Aa3 by Moody's, A by S&P and A-plus by Fitch.
Bank of America Merrill Lynch is expected to price a $125 million issue for the Ascension Health Credit Group consisting of the Connecticut Health and Educational Facilities Authority's Series 1999B variable-rate revenue bonds and the Indiana Health Facilities Financing Authority's Series 2001A-2 revenue bonds. The deal is rated Aa2 by Moody's and AA-plus by S&P and Fitch.
On Wednesday, the Los Angeles County Metropolitan Transportation Authority, Calif., is competitively selling $455.71 million of Series 2017A Proposition C sales tax revenue bonds. The deal is rated Aa2 by Moody's and AA-plus by S&P.
In the negotiated sector on Wednesday, Citigroup is expected to price the Mayor and City Council of Baltimore's $486 million of Series 2017A-C revenue bonds for water and wastewater projects for retail investors. The deal is rated Aa2 by Moody's and AA by S&P.
Jefferies is expected to price the Texas Public Finance Authority's $275 million of Series 2017 taxable GO and refunding bonds.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $39.6 million to $10.87 billion on Tuesday. The total is comprised of $2.81 billion of competitive sales and $8.06 billion of negotiated deals.
Ramirez Sees Negative Net Supply Over Next Month
Ramirez & Co. expects that over the next 30 days, the market will see gross supply at $9.58 billion but net muni market supply at negative $14.32 billion.
"The states that stand to experience the largest change in outstanding debt include Texas (negative $5.14 billion), New York (negative $2.19 billion), California (negative $1.79 billion), Minnesota (negative $1.70 billion), and Georgia (negative $1.08 billion)," Ramirez said in a Monday market comment. "We estimate long-term new issue gross supply for 2017 at $368 billion, for a decline of about $60 billion or negative 14%, which incorporates $204 billion of new money bonds and $164 billion of refundings. We expect 2017 to end with net market supply at $38 billion."
