The municipal bond market is gearing up for the largest volume week of the year. About $9 billion of new supply is set to be priced, consisting of $6.2 billion of negotiated deals and $2.9 billion of competitive sales.
In the secondary, muni bond traders were watching the screens as Treasury prices rose while equities fell.
Secondary Market
Treasuries were stronger on Monday. The yield on the two-year Treasury fell to 0.68% from 0.72% on Friday, while the 10-year Treasury yield dropped to 1.80% from 1.84%, and the 30-year Treasury bond yield decreased to 2.64% from 2.68%.
U.S. stocks moved lower in early trade, with the Dow Jones Industrial Average off about 1.3%, the Nasdaq down around 1.8% and the S&P 500 falling almost 1.4%.
On Friday, the yield on the 10-year benchmark muni general obligation was steady from 1.66% on Thursday, while the 30-year muni yield was flat at 2.72%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Friday at 86.7% compared to 89.2% on Thursday, while the 30-year muni to Treasury ratio stood at 99.7% versus 100.9%, according to MMD.
Primary Market
Tuesday should be the busiest day of the week.
The New York City Transitional Finance Authority intends to sell $1 billion in two sales.
On Monday, Bank of America Merrill Lynch priced for retail investors $750 million of the TFA's Fiscal 2016 Series E-1 future tax secured subordinate bonds. The issue was priced to yield from 0.71% with a 3% coupon in 2019 to 2.93% with a 5% coupon in 2042; a 2018 maturity was offered as a sealed bid.
The bonds, which will be priced for institutions on Tuesday, are rated Aa1 by Moody's Investors Service and triple-A by Standard & Poor's and Fitch Ratings.
The TFA will also competitively sell $250 million of taxable fixed-rate new money bonds on Tuesday. Those bonds are rated triple-A by Fitch.
The city of Houston will be coming to market with $800 million of combined utility system first lien revenue and refunding bonds. Wells Fargo is scheduled to price the deal on Tuesday. It is rated Aa3 by Moody's and AA by S&P and Fitch.
In the competitive arena on Tuesday, Washington state will sell two deals totaling $522.11 million. The offerings consist of $321.58 million of Series 2016C various purpose general obligation bonds and $200.53 million of Series 2016D motor vehicle tax GOs. Both sales are rated Aa1 by Moody's and AA-plus by S&P and Fitch.
Minnesota will competitively sell on Tuesday two deals totaling $350.75 million. The offering is made up of $247.43 million of Series 2016A state revolving fund revenue bonds and $103.35 million of Series 2016B state revolving fund revenue refunding bonds. The deals are rated triple-A by Fitch.
The Dallas Independent School District will competitively sell $304.98 million of Series 2016A unlimited tax school building bonds. The deal, which is backed by the Permanent School Funding guarantee program, is rated triple-A by Moody's, S&P and Fitch.
Clark County, Nev., on Tuesday will competitively sell $283.73 million of Series 2016A limited tax GO bond bank refunding bonds, additionally secured by pledged revenues. The issue is rated Aa1 by Moody's and AA by S&P.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 29,039 trades on Friday on volume of $5.35 billion.
Last Week's Most Active Sectors
Revenue bonds comprised 53.24% of new issuance in the week ended Feb. 5, up from 52.95% in the previous week, according to Markit. General obligation bonds comprised 39.91% of total issuance, up from 39.01%, while taxable bonds made up 6.85%, down from 8.04%.
Some of the most actively traded issues by type in the week ended Feb. 5 were in Puerto Rico, New York and California, according to Markit. In the GO bond sector, the Puerto Rico Commonwealth 8s of 2035 traded 63 times. In the revenue bond sector, the New York state Thruway Authority 5s of 2019 traded 28 times. And in the taxable bond sector, the state of California 7.6s of 2040 traded 26 times,
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $202.4 million to $11.73 billion on Monday. The total is comprised of $4.05 billion of competitive sales and $7.68 billion of negotiated deals.
