Top-shelf municipal bonds were slightly stronger on Tuesday morning, as yields were lower by as many as two basis points according to traders, as they await the first new issuance of the week.
Secondary Market
The yield on the 10-year benchmark muni general obligation was as many as one basis point lower from 2.33% on Monday, while the 30-year GO yield was down as many as two basis points from 3.03%, according a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were mixed on Tuesday morning. The yield on the two-year was steady at 1.24% on Monday, while the 10-year Treasury yield dropped to 2.34% from 2.35%, and the yield on the 30-year Treasury bond increased to 2.99% from 2.98%.
On Monday, the 10-year muni to Treasury ratio was calculated at 95.1% compared to 93.9% on Friday, while the 30-year muni to Treasury ratio stood at 101.6%, versus 101.0%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 37,929 trades on Monday on volume of $9.554 billion.
Primary Market
This week's $7.32 billion new issue slate is comprised of $6.75 billion of negotiated deals and $569.2 million of competitive sales.
The state of Massachusetts plans to come to market with over $1 billion of bonds in two separate negotiated deals that are heavily loaded with green bonds.
Citigroup is expected to price the state's $778 million general obligation bond offering on Thursday. The deal is comprised of $400 million of Series 2017A GO, $278 million of Series 2017C refunding bonds and $100 million of Series 2017B GO green bonds.
The deal is rated Aa1 by Moody's Investors Service and AA-plus by S&P Global Ratings and Fitch Ratings.
Since 2013, U.S. issuers have sold almost $15.5 billion of green bonds, according to ICE Data Services. Most of the issuance occurred in 2016 when over $7.5 billion of green bonds were sold.
Since there is no official regulatory definition, ICE said it characterizes green bonds "by the issuer (and [as] stated in the OS), these bonds are issued to fund environmentally beneficial projects such as reducing the impact of, or adapting to, climate change, clean water/drinking water, advance renewable energy, energy efficiency, acquisition of land, preservation and habitat restoration, more efficient and less polluting transportation, and other environmental-related projects."
Bank of America Merrill Lynch is set to price Massachusetts' $305 million of state revolving fund Series 20 green bonds and Series 2017 refunding bonds for retail investors on Tuesday ahead of the institutional pricing on Wednesday.
The deal is rated triple-A by Moody's, S&P and Fitch.
Also on Tuesday, Goldman Sachs is expected to price San Antonio, Texas' $306.98 million of electric and gas systems refunding and revenue bonds.
The deal is rated Aa1 by Moody's, AA by S&P and AA-plus by Fitch.
Since 2007, San Antonio has sold about $13 billion of bonds, with the most issuance occurring in 2012 when it offered $2.05 billion of debt. The Alamo City saw a low year of issuance in 2011, when it sold $411 million – one of only three times in that period it has not sold more than $1 billion in a calendar year.
Citi is set to price the state of Oregon's $296 million of Series I, J, and L higher education GOs on Tuesday.
The deal is rated Aa1 by Moody's and AA-plus by S&P and Fitch.
RBC Capital Markets is expected to price the San Joaquin County Transportation Authority, Calif.'s $207.77 million of Series 2017 Measure K sales tax revenue refunding bonds on Tuesday.
The deal is rated AA by S&P and Fitch.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $248.6 million to $12.59 billion on Tuesday. The total is comprised of $3.39 billion of competitive sales and $9.20 billion of negotiated deals.
