Prices of top-rated municipal bonds were slightly higher at mid-session, with yields on some maturities as much as three basis points lower, according to traders. This is ahead of the nearly $9 billion in supply that will be seen this week.
Secondary Market
The yield on the 10-year benchmark muni general obligation on Monday is down as much as three basis points (and off as much as two basis points adjusted for the March rollover) from Friday's 2.02%, while the yield on 30-year GO is down as much as three basis point from 2.87%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were weaker at midday, as the yield on the two-year Treasury note increased to 0.66% from 0.62% on Friday while the 10-year yield rose to 2.07% from 2.01% and the 30-year yield rose to 2.66% from 2.62%.
The 10-year muni to Treasury ratio was calculated at 101.0% on Friday versus 100.3% on Thursday, while the 30-year muni to Treasury ratio stood at 110.5% compared to 109.3%.
Primary Market
New issue volume for this week is estimated at $8.947 billion, according to Ipreo and The Bond Buyer. That total is up from a revised $7.532 billion sold last week, according to Thomson Reuters.
There are $6.965 billion of negotiated deals slated for this week and $1.982 billion competitive sales scheduled.
Bank of America Merrill Lynch and Morgan Stanley are scheduled to price the biggest deal of the week - California's $1.9 billion of general obligation bonds for retail investors on Tuesday followed by institutional pricing on Wednesday. The deal is rated Aa3 by Moody's Investors Service and A-plus by both Standard & Poor's and Fitch Ratings.
Bank of America Merrill Lynch is also expected to price Thursday the Los Angeles Department of Water and Power, Calif.'s $495 million power system revenue bonds.
On the competitive side, Maryland is scheduled to auction two issues totaling $922 million on Wednesday. The sales consist of $518 million tax-exempt First Series A State and Local Facilities Loan of 2015 GOs and $404 million First Series B State and Local Facilities Loan of 2015 refunding GOs. The issues are rated triple-A by Moody's, S&P and Fitch.
Maryland comes to market fairly often, having sold five deals since 2012, the latest being July 23 of last year, when JP Morgan won $449.61 million of GOs with a true interest cost of 2.6535%.
The Week's Top Traded Munis by Sector
Munis from issuers in Pennsylvania, New York, and Connecticut were the top traded bonds by market sector in the week ended Feb. 27, according to data released by Markit.
Looking at market sector makeup, revenue bonds comprised 53.72% of new issuance in the week ended Feb. 27, down from 55.29% in the week ended Feb. 20. GOs comprised 36.25% of total issuance, up from 36.00%, while taxables made up 10.03%, up from 8.71%.
In the GO bond sector, Chartiers Valley School District, Pa., 4s of 2044 was the top traded maturity, trading 332 times. In the revenue bond sector, New York City Municipal Water Finance Authority 5s of 2039 traded 85 times, topping the list. And in the taxable bond sector, Hamden, Conn. 5.2s of 2044 traded 52 times to lead all deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 35,602 trades on Friday on volume of $9.370 billion.
Most active on Friday, based on the number of trades, was the JEA electric system revenue bonds Series 3 2015A 3.75% of 2041, which traded 164 times at an average price of 98.864, with an average yield of 3.815%.
