Prices of top-rated municipal bonds finished mixed on Monday, according to traders, with weakness seen in longer-dated maturities. Trading was subdued ahead of the week's almost $9 billion of new supply.
The Secondary Market
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 rose one basis point to 2.84% from 2.83%, according to the final 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%.
"Municipal bond yields were generally unchanged to slightly higher, as secondary trading remained relatively muted to start the week," according to a note from Interactive Data, which added that traders appeared to be staying on the sidelines, getting ready for the upcoming new issue slate.
Treasury prices were lower on Monday as the yield on the two-year Treasury note rose to 0.53% from 0.50% on Friday, while the 10-year yield increased to 1.90% from 1.85% and the 30-year yield rose to 2.57% from 2.51%.
The 10-year muni to Treasury ratio was calculated on Monday at 102.6% versus 105.0% on Friday, while the 30-year muni to Treasury ratio stood at 110.9% compared to 113.1%.
Primary Market
Municipal bonds scheduled for sale this week total $8.7 billion, with the calendar consisting of $6.2 billion of negotiated deals and $2.5 billion of competitive sales.
Leading off the slate are three separate competitive offerings on Tuesday from California totaling $1.1 billion. The sales 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 slated for Tuesday is the Chicago Board of Education's $300 million of unlimited tax GOs. PNC Capital Markets is the senior manager on the deal, which is expected to be structured as $275.68 million of Series 2015C project bonds and $20 million of Series 2015E green bonds, backed by dedicated alternative revenues.
The sale is coming on the heels of a spate of negative headlines surrounding the district, which is under federal investigation over the awarding of a no-bid contract.
Also coming this week is Washington's Energy Northwest's $888 million offering. JPMorgan is slated to price the tax-exempt and taxable bonds on Thursday in six series. The issue is rated Aa1 by Moody's, AA-minus by S&P and AA by Fitch.
Phoenix, Ariz., is also 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 to finance wastewater and drinking water infrastructure projects statewide. In what will be the Nutmeg State's first all-green bond sale, the bonds are being 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 taxable 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%.
