Prices of top-rated municipal bonds closed stronger on Monday, according to traders, as yields on some maturities weakened by as much as three basis points.
Treasury prices also rose while stocks dropped after equities in China plunged. Oil prices fell to a four-month low as the dollar declined.
The yield on the 10-year benchmark muni general obligation fell two basis points to 2.18% from 2.20% on Friday, while the yield on the 30-year GO was off three basis points to 3.12% from 3.15%, according to the final read of Municipal Market Data's triple-A scale.
Treasury prices were higher late on Monday, with the yield on the two-year Treasury note dropping 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 2.94% from 2.97%.
The 10-year muni to Treasury ratio was calculated on Monday at 95.8% versus 95.1% on Friday, while the 30-year muni to Treasury ratio stood at 105.0% compared to 105.3%, according to MMD.
Earlier in China, the Shanghai Composite Index closed down 8.5%, its worst daily percentage drop since 2007. U.S. stock prices opened lower and stayed lower throughout the day. Near the close, the Dow Jones Industrial Average was off about 140 points, the Nasdaq was down around 45 points and the S&P 500 was off over 10 points. European shares closed about 1% lower on the day. Elsewhere, U.S. September crude oil fell 78 cents to $47.36 a barrel and the dollar declined against most major currencies.
The Federal Open Market Committee is holding its monetary policy meeting on Tuesday and Wednesday, with an announcement on interest rates set for Wednesday afternoon.
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 $213.89 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 bonds were priced to yield from 0.28% with a 4% coupon in 2016 to 2.44% with a 5% coupon in 2026.
The issue 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.
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.
