Munis Slightly Stronger Ahead of First Issuance Wave of Week

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Top-shelf municipal bonds were a tad stronger to close out the slow day Monday, as yields on some maturities were as much as one basis point lower, according to traders.

Secondary Market

The 10-year benchmark muni general obligation yield was one basis point lower to 2.32% from 2.33% on Friday, while the yield on the 30-year GO was down one basis point to 3.05% from 3.06%, according to a final read of Municipal Market Data's triple-A scale.

U.S. Treasuries were stronger on Monday. The yield on the two-year Treasury fell to 1.14% from 1.22% on Friday, while the 10-year Treasury yield was down to 2.40% from 2.46%, and the yield on the 30-year Treasury bond dropped to 2.99% from 3.03%.

The 10-year muni to Treasury ratio was calculated at 96.6% on Monday compared to 94.5% on Friday, while the 30-year muni to Treasury ratio stood at 102.0%, versus 100.5%, according to MMD.

Previous Week's Top Underwriters

The top negotiated and competitive underwriters of last week included Bank of America Merrill Lynch, Goldman Sachs, Stifel, RBC Capital Markets and Barclays, according to Thomson Reuters data.

In the week of Jan. 15 to Jan. 21, BAML underwrote $1.309 billion, Goldman $1.160 billion, Stifel $1.019 billion, RBC $908.3 million and Barclays $811.5 million.

Prior Week's Actively Traded Issues

Revenue bonds comprised 58.48% of new issuance in the week ended Jan. 20, down from 58.64% in the previous week, according to Markit. General obligation bonds comprised 36.03% of total issuance, down from 36.07%, while taxable bonds made up 5.49%, up from 5.29%.

Some of the most actively traded issues by type in the week were from Texas, New York and Wisconsin.

In the GO bond sector, the Klein ISD, Texas, 4s of 2046 were traded 44 times. In the revenue bond sector, the New York Triborough Bridge and Tunnel Authority 5s of 2047 were traded 108 times. And in the taxable bond sector, the Wisconsin 3.954s of 2036 were traded 91 times.

Primary Market

Ipreo estimates volume for the new week at $6.8 billion, up from a revised $4.8 billion sold in the prior week, according to updated data from Thomson Reuters. The new week's slate consists of $4.7 billion of negotiated deals and $2.2 billion of competitive sales.

The action will get started on Tuesday, as there are no larger deals priced for institutions on Monday.

"While there is no one deal that everyone will be waiting for and looking at [like Chicago's deal last week], people are still anticipating the chunky calendar," said one New York trader. "I anticipate good action, there seems to be a lot of cash out there right now."

The largest competitive deal on the calendar and second largest overall deal will splash into the market on Tuesday. The Metropolitan Government of Nashville and Davidson County, Tenn will be selling $457 million of Series 2017 general obligation bonds improvement bonds. The deal is rated Aa2 by Moody's Investors Service and AA by S&P Global Ratings.

RBC Capital Markets is set to price Philadelphia, Pa.'s $279.985 million of Series 2017 GO refunding bonds The deal is rated A2 by Moody's, A-plus by S&P and A-minus by Fitch Ratings.

Citi is slated to price the Kentucky State Property and Building Commission's $224 million of revenue bonds for Project 115. The deal is rated Aa3 by Moody's, A by S&P and A-plus by Fitch.

RBC is expected to price Spring Independent School District in Harris County, Tx.'s $198.075 million of unlimited tax school building bonds. The deal is rated Aa3 by Moody's and A-plus by S&P.

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