Prices of top-rated municipal bonds were stronger at mid-session, traders said, as yields on some maturities weakened by as much as three basis points.
Treasury prices rose as U.S. stocks fell after equities in China plunged. Oil prices dropped to a four-month low on the Chinese share decline.
In the primary, traders are looking to the week's $6.3 billion new-issue calendar, which features large deals from Michigan, New York, Texas and Virginia.
Secondary Market
The yield on the 10-year benchmark muni general obligation was down as much as two basis points on Monday from 2.20% on Friday, while the yield on the 30-year GO was off from one to three basis points from 3.15%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were higher on Monday, with the yield on the two-year Treasury note falling to 0.65% from 0.68% on Friday, while the 10-year yield declined to 2.23% from 2.26% and the 30-year yield decreased to 2.95% from 2.97%.
Earlier in China, the Shanghai Composite Index closed down 8.5%, its worst daily percentage drop since 2007. U.S. stock prices moved lower with the Dow Jones Industrial Average off about 100 points, the Nasdaq down around 40 points and the S&P 500 off nearly 10 points. European shares were also lower. U.S. September crude oil fell 56 cents to $47.58 a barrel.
The Federal Open Market Committee is meeting on Tuesday and Wednesday, with an announcement on monetary policy set for Wednesday afternoon.
The 10-year muni to Treasury ratio was calculated on Friday at 95.1% versus 97.2% on Thursday, while the 30-year muni to Treasury ratio stood at 105.3% compared to 106.3%, according to MMD.
Primary Market
Volume for this week is estimated at $6.32 billion, consisting of $5.12 billion of negotiated deals and $1.20 billion of competitive sales.
In the competitive sector on Monday, the Florida Department of Transportation sold $216.43 million of Series 2015A full faith and credit right-of-way acquisition and bridge construction refunding bonds. JPMorgan won the bonds with a true interest cost of 1.90%.
The issues was rated Aa1 by Moody's Investors Service and triple-A by Standard & Poor's and Fitch Ratings.
The last time the state DOT competitively sold comparable bonds was on Oct. 4, 2012, when Citigroup won $234.72 million of Series 2012B full faith and credit right-of-way acquisition and bridge construction refunding bonds with a true interest cost of 2.699%.
On Tuesday, the Virginia College Building Authority is selling $290 million of Series 2015D educational facilities revenue bonds under the 21st Century College and Equipment Program. The issue is rated Aa1 by Moody's and AA-plus by Fitch.
The last time the authority competitively sold comparable bonds was on May 1, 2014, when Bank of America Merrill Lynch won $27.99 million of Series 2014B educational facilities revenue refunding bonds with a TIC of 1.70%.
Also on Tuesday, Fort Worth, Texas, is selling $256 million of bonds in two separate sales, consisting of $128.39 million of Series 2015A general purpose refunding and improvement bonds and $127.63 million of Series 2015A water and sewer system revenue refunding and improvement bonds.
The general purpose bonds are rated Aa1 by Moody's and AA-plus by S&P and Fitch and the water bonds are rated Aa1 by Moody's and AA by S&P and Fitch.
The last time the city competitively sold comparable securities was on Aug. 14, 2012, when Robert W. Baird won $85.79 million of Series 2012 combination tax and revenue certificates of obligation with a TIC of 2.65% and on Sept. 14, 2010, when the city sold $45.87 million of Series 2010C water and sewer system revenue bonds to Wells Fargo Securities with a TIC of 3.35%.
In the negotiated sector, New York City's $750 million of Fiscal 2016 Series A&B general obligation bonds are set to be priced by Siebert Brandford Shank. Retail orders will be taken on Tuesday and Wednesday ahead of the institutional pricing on Thursday. The issue is rated Aa2 by Moody's and AA by S&P and Fitch.
Citigroup is expected to price San Antonio, Texas' $422 million of general improvement and refunding combination tax and revenue certificates of obligation. The issue is tentatively structured as $43 million of taxables due 2016 to 2035 and $379 million of tax-exempts due 2016 to 2035. The bonds, which are set to be priced on Tuesday, are rated triple-A by Moody's, S&P and Fitch.
Citi is also slated to price the New York City Industrial Development Agency's $364 million of special facilities revenue bonds for American Airlines. The deal, which has a one-year hard put, is expected to be priced on Wednesday.
On Wednesday's competitive slate, Columbus, Ohio, is coming to market with nearly $319 million of bonds in three separate sales, consisting of $230.66 million of Series 2015A unlimited tax various purpose bonds, $74.69 million of Series 2015B limited tax various purpose bonds, and $13.64 million of Series 2015C taxable limited tax various purpose bonds. The issue is rated triple-A by Moody's, S&P and Fitch.
On Thursday, JPMorgan will price the Michigan State Building Authority's $990 million of Series 2015 I revenue and revenue refunding bonds. The issue, tentatively structured as serials running from 2015 through 2050, is rated Aa3 by Moody's, A-plus by S&P and AA-minus by Fitch.
Prior Week's Actively Traded Issues by Sector
Revenue bonds comprised 54.76% of new issuance in the week ended July 24, up from 53.64% in the previous week, according to Markit. General obligation bonds comprised 36.36% of total issuance, down from 36.56%, while taxable bonds made up 8.80%, down from 9.80%.
Some of the most actively traded issues during the week were in Texas, Maryland, and California.
In the revenue bond sector, the Harris County, Texas, Cultural Educational Facilities Financing Corp.'s 4s of 2045 were traded 73 times. In the GO bond sector, the Maryland 3s of 2028 were traded 72 times. And in the taxable bond sector, the Vernon, Calif., electric system revenue 4.05s of 2023 were traded 20 times, according to Markit.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 29,242 trades on Friday on volume of $7.398 billion.
The most active bond, based on the number of trades, was the Harris County, Texas, Cultural Education Facilities Finance Corp.'s Series 2015 Houston Methodist Hospital revenue bond 4s of 2045, which traded 168 times at an average price of 99.213, an average yield of 4.032%. The bonds were initially priced at 96.417 to yield 4.21%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $178.7 million to $11.75 billion on Monday. The total is comprised of $4.69 billion competitive sales and $7.06 billion of negotiated deals.
