Munis Flat as Market Preps for More Supply

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Top-rated municipal bonds were flat with at mid-session, traders said, as they prepared for yet another huge issuance week, with an estimated $16.5 billion set to pass through the pipeline.

 

Secondary Market

The yield on the 10-year benchmark muni general obligation on Monday was flat from 1.72% on Friday, while the yield on the 30-year was unchanged at 2.54%, according to a read of Municipal Market Data's triple-A scale.

U.S. Treasuries were weaker on Monday. The yield on the two-year rose to 0.84% from 0.82% on Friday, the 10-year Treasury yield gained to 1.77% from 1.73% and the yield on the 30-year Treasury bond increased to 2.52% from 2.48%.

On Friday, the 10-year muni to Treasury ratio was calculated at 99.1% compared to 98.6% on Thursday, while the 30-year muni to Treasury ratio stood at 102.0% versus 101.7%, according to MMD.

 

MSRB: Previous Session's Activity

The Municipal Securities Rulemaking Board reported 33,299 trades on Friday on 7volume of $10.41 billion.

 

Prior Week's Actively Traded Issues

Revenue bonds comprised 57.99% of new issuance in the week ended Oct. 21, up from 57.85% in the previous week, according to Markit. General obligation bonds comprised 36.60% of total issuance, down from 36.63%, while taxable bonds made up 5.41%, down from 5.52%.

Some of the most actively traded issues by type were from Connecticut, New York and Pennsylvania. In the GO bond sector, the Connecticut 3.375s of 2036 were traded 63 times. In the revenue bond sector, the New York Metropolitan Transportation Authority 3s of 2032 were traded 46 times. And in the taxable bond sector, the Commonwealth Financing Authority of Pennsylvania 4.144s of 2038 were traded 49 times.

 

Previous Week's Top Underwriters

The top negotiated and competitive underwriters of last week included Citigroup, Bank of America Merrill Lynch, Morgan Stanley, Wells Fargo Securities and RBC Capital Markets, according to Thomson Reuters data. In the week of Oct. 16-Oct. 22, Citi underwrote $3.38 billion, BAML $2.83 billion, Morgan Stanley $2.01 billion, Wells Fargo $1.74 billion and RBC $1.29 billion.

 

Primary Market

Volume for the week is estimated $16.5 billion, with the upcoming slate composed of $13.71 billion of negotiated deals and $2.79 billion of competitive sales.

Most of the issuance is set to price on Wednesday, with five negotiated deals larger than $200 million and five competitive sales of greater than $100 million on the slate.

Action gets started on Tuesday when Bank of America Merrill Lynch is expected to price a $429 million deal for the Piedmont Healthcare Inc. project in Georgia.

The sale consists of the Fulton County Development Authority, Ga.'s $195.54 million of Series 2016A revenue bonds, the Hospital Authority of Clarke County's $185.15 million of Series 2016A revenue anticipation certificates and the Hospital Authority of Fayette County's $48.74 million of Series 2016A revenue anticipation certificates.

The deal is rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings.

Wells Fargo Securities is expected to price the Virginia Transportation Board's $317.13 million of federal transportation grant anticipation notes on Tuesday. The deal is rated AA-plus by Fitch Ratings.

RBC Capital Markets is on the docket to price Butler County, Ohio's $210 million of hospital facilities revenue bonds on Tuesday. The deal is rated A2 by Moody's and A by S&P.

In the competitive arena on Tuesday, the city and county of Denver, Colo., will be selling $115 million of Series 2016 $429 million deal for the Piedmont Healthcare Inc. project. The deal is Aa1 by Moody's, triple-A by S&P and Fitch Ratings.

The issuer last sold comparable bonds competitively on Jan. 11. 2012, when JPMorgan Securities won $50.43 million of Series 2012 $429 million deal for the Piedmont Healthcare Inc. project with a true interest cost of 2.26%.

 

Bond Buyer Visible Supply

The Bond Buyer's 30-day visible supply calendar increased $3.72 billion to $20.72 billion on Monday. The total is comprised of $3.72 billion of competitive sales and $17.00 billion of negotiated deals.

 

 

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