Prices of top-shelf municipal bonds were steady to stronger at mid-session, according to traders, with yields on most maturities unchanged to one basis point weaker.
In the primary, muni traders were preparing to take on a paltry new issue slate totaling about $3.3 billion.
Secondary Market
The yield on the 10-year benchmark muni general obligation was weaker by as much as one basis point from 2.16% on Friday, while the yield on the 30-year GO was off as much as one basis point from 3.10%, according to a read of Municipal Market Data's triple-A scale. Intermediate maturities were steady to two basis points weaker in very slow trading.
Treasury prices were slightly higher on Monday, with the yield on the two-year Treasury note slipping to 0.71% from 0.72% on Friday, while the 10-year yield fell to 2.16% from 2.18% and the 30-year yield decreased to 2.88% from 2.89%.
The 10-year muni to Treasury ratio was calculated on Friday at 98.7% versus 99.7% on Thursday, while the 30-year muni to Treasury ratio stood at 106.5% compared to 107.2%, according to MMD.
Primary Market
Volume for the week was estimated at $3.26 billion, consisting of $2.38 billion of negotiated deals and $876 million of competitive sales.
Topping the calendar is a $1 billion offering from the Dormitory Authority of the State of New York.
Scheduled to be priced by JPMorgan Securities on Wednesday after a one-day retail order period on Tuesday, the DASNY deal is expected to be rated Aa1 by Moody's Investors Service and triple-A by Standard & Poor's.
DASNY anticipates the proceeds will be used to refund certain outstanding bonds issued under various programs, which may include bonds under the personal income tax revenue bond program issued by the Dormitory Authority and the Environmental Facilities Corp., the CUNY program, and the upstate community college program. The bonds will be issued under the personal income tax general purpose resolution.
"The market has been very volatile this week, but given the strength and familiarity of the personal income tax program we are optimistic that the sale will go well," a spokesperson for DASNY said last week. "Market conditions next week will dictate the duration of the retail order period."
Michael Pietronico, CEO of Miller Tabak Asset Management, said "We expect this deal to do quite well, as demand for New York paper remains strong."
City Securities is slated to price Wednesday Valparaiso, Ind.'s $143 million multi-school building construction first mortgage bonds. The issue is expected to be rated AA-plus by S&P.
Barclays Capital is set to price the Lower Colorado River Authority, Texas' $135 million of Series 2015D refunding revenue bonds on Wednesday. The issue is rated A by S&P and Fitch Ratings.
In the competitive arena, the state of Wisconsin will sell $391 million of Series 2015C general obligation bonds on Tuesday. The issue is rated AA by Fitch.
The bonds mature between 2017 and 2036 and offer an eight-year call instead of the traditional 10-year; Wisconsin has been using the eight-year call on recent sales due to market reception, said capital finance director David Erdman.
Prior Week's Actively Traded Issues by Sector
Revenue bonds comprised 53.81% of new issuance in the week ended Aug. 28, down from 55.37% in the previous week, according to Markit. General obligation bonds comprised 37.72% of total issuance, up from 35.72%, while taxable bonds made up 8.47%, down from 8.91%.
Some of the most actively traded issues in the week were in New Jersey, California and Georgia, according to Markit.
In the revenue bond sector, the New Jersey Economic Development Authority 4s of 2024 were traded 133 times. In the GO bond sector, the California 5s of 2045 were traded 76 times. And in the taxable bond sector, the Cobb-Marietta Coliseum and Exhibit Hall Authority, Ga. 4 1/2s of 2047 were traded 32 times, Markit said.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 29,973 trades on Friday on volume of $5.907 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $68.6 million to $6.85 billion on Monday. The total is comprised of $2.85 billion competitive sales and $4.00 billion of negotiated deals.
Puerto Rico
The news out of Puerto Rico is about what's not happening, according to Janney Municipal Strategist Alan Schankel.
"The attempted sale of $750 million Aqueduct and Sewer Authority (Caa3/CCC-/CC), on the calendar for the past two weeks, was not completed due to lack of investor interest. The commonwealth's debt restructuring plan, promised for delivery over the past weekend, received more time from the governor, with a new due date of Sept. 8," he wrote in Monday's market comment.
"A $90 million PRASA bank loan, which was supposed to be refinanced from proceeds of the so far failed new issue, is due today," Schankel wrote, adding, "The year-long Electric Power Authority restructuring negotiations, stretched out with multiple extensions of a forbearance agreement, hits its next deadline tomorrow."
