Prices of top-rated municipal bonds were mixed at mid-session according to traders, ahead of the week's almost $9 billion of new issues.
Secondary Market
Prices of top-quality munis were mixed with traders seeing weakness on the long end. The yield on the 10-year benchmark muni general obligation was unchanged from 1.94% on Friday, while the yield on the 30-year GO was up as much as one basis point from 2.83%, according to a read of Municipal Market Data's triple-A scale. On Monday, April 13, the yield on the 10-year muni stood at 1.97% while the yield on the 30-year was at 2.84%.
"Munis had a very limited reaction to Treasury trading on Friday and continued in their lethargic ways today," MMD Senior Market Analyst Randy Smolik wrote in a market comment. "Week after week of hefty issuance has kept muni buyers sidelined as they wait for primary pricings."
Treasury prices were lower on Monday as the yield on the two-year Treasury note rose to 0.51% from 0.50% on Friday, while the 10-year yield gained to 1.88% from 1.85% and the 30-year yield increased to 2.54% from 2.51%.
The 10-year muni to Treasury ratio was calculated on Friday at 105.0% versus 103.3% on Thursday, while the 30-year muni to Treasury ratio stood at 113.1% compared to 110.7%.
Primary Market
Municipal bonds scheduled for sale this week are estimated to total $8.7 billion, according to Ipreo and The Bond Buyer. There are $6.2 billion of negotiated deals and $2.5 billion of competitive sales scheduled for sale.
Leading off the calendar are three separate competitive offerings from California totaling $1.1 billion. The sales, slated for Tuesday, consist of $592.7 million of tax-exempt various purpose general obligation refunding bonds, Bid Group C; $403.5 million of tax-exempt various purpose GO refunding bonds, Bid Group B; and $105.36 million of taxable various purpose GO, Bid Group A. The bonds are rated Aa3 by Moody's Investors Service and A-plus by Standard & Poor's and Fitch Ratings.
The Golden State last sold tax-exempt bonds competitively on Nov. 13, 2014, when Bank of America Merrill Lynch won $630 million of tax-exempt various purpose GOs with a true interest cost of 2.9499%. The state last sold taxable bonds competitively on Nov. 13, 2014, when Citi won $270 million of taxable various purpose GOs with a TIC of 0.9560%.
Also coming this week is an $888 million negotiated deal for Washington's Energy Northwest. JPMorgan is slated to price the tax-exempt and taxable bonds on Thursday in six series, consisting of $101.32 million of Series 2015-A Project 1 electric revenue refunding bonds; $314.63 million of Series 2014-A Columbia generating station electric revenue and refunding bonds; $74.29 million of Series 2014-A revenue refunding bonds; $25.43 million of Series 2015B Project 1 taxable electric revenue refunding bonds; $332.96 million of Series 2015-B Columbia generating station taxable electric revenue and refunding bonds; and $39.23 million of Series 2015-B taxable revenue refunding bonds. The issue is rated Aa1 by Moody's, AA-minus by S&P and AA by Fitch.
Phoenix, Ariz., is scheduled to come to market with $391 million of tax-exempt and taxable Series 2 civic improvement subordinated excise tax revenue refunding bonds, Wells Fargo Securities is slated to price the issue on Tuesday. The issue is rated Aa3 by Moody's and AA-plus by S&P.
And Connecticut plans to issue $250 million of green bonds this week to finance wastewater and drinking water infrastructure projects statewide.
In what will be its first all green bond sale, the bonds will be offered to retail investors on Monday and Tuesday ahead of the institutional pricing on Wednesday. The sale follows Connecticut's first issuance of $60 million green bonds in the Fall of 2014, which was just a small part of an overall $300 million GO sale.
In the competitive arena on Monday, the Milwaukee Metropolitan Sewerage District, Wis., sold $100 million of Series 2015A GO promissory notes. Citi won the issue with a TIC of 2.9386%. The notes were priced to yield from 1.09% with a 3% coupon in 2018 to 3.47% with a 3.5% coupon in 2034. The issue is rated Aa1 by Moody's, AA-plus by S&P and triple-A by Fitch.
The district was last in the market on Dec. 13, 2010, when Citi won $50 million of Series 2010L Build America Bonds-direct payment taxables, GO sewerage system bonds with a TIC of 3.1022%.
The Week's Most Actively Traded Issues
Among the most actively traded issues in the week ended April 17, were issuers from New York and New Jersey and West Virginia, according to Markit.
Broken down by market sector, revenue bonds comprised 54.22% of new issuance, up from 53.99% in the prior week. General obligation bonds comprised 37.67% of total issuance, down from 38.24%, while taxable bonds made up 8.11%, up from 7.77%.
In the revenue bond sector, the Monongalia Co., W.Va., 4s of 2035 were traded 48 times. In the GO bond sector, the Port Authority of New York & New Jersey 3 1/4s of 2033 were traded 48 times. And in the taxable bond sector, the Port Authority of New York & New Jersey 2 1/2s of 2022 were traded 18 times, according to Markit.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $38.8 million to $11.871 billion on Monday. The total is comprised of $4.059 billion competitive sales and $7.812 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 37,290 trades on Friday on volume of $11.859 billion.
The most active bond, based on the number of trades, was the New York City Transitional Finance Authority's Fiscal 2015 Subseries E-1 future tax secured subordinated 3 1/4s of 2032, which traded 269 times at an average price of 99.182 with an average yield of 3.313%. The bonds were initially priced at 99.356 to yield 3.30%.
Paul Burton contributed to this report
