Munis Steady Ahead of New Issue Slate

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Top-quality municipal bonds were unchanged at mid-session, according to traders who returned to their desks Tuesday after a three-day holiday weekend. They will be looking ahead to a smaller-than-usual new issue calendar that will be pricing into a volatile yield environment.

Secondary Market

The 10-year benchmark muni general obligation yield was flat on Tuesday from 2.37% on Friday, while the yield on the 30-year GO was steady from 3.11%, according to a read of Municipal Market Data's triple-A scale.

Treasuries were narrowly mixed around unchanged Tuesday. The yield on the two-year Treasury rose to 1.20% from 1.19% on Friday, while the 10-year Treasury fell to 2.41% from 2.42%, and the yield on the 30-year Treasury bond decreased to 3.02% from 3.03%.

On Friday, the 10-year muni to Treasury ratio was calculated at 97.9% compared to 98.4% on Thursday, while the 30-year muni to Treasury ratio stood at 102.8%, versus 103.0%, according to MMD.

MSRB: Previous Session's Activity

The Municipal Securities Rulemaking Board reported 38,315 trades on Friday on volume of $8.12 billion.

Prior Week's Actively Traded Issues

Revenue bonds comprised 58.52% of new issuance in the week ended Feb. 17, down from 59.02% in the previous week, according to Markit. General obligation bonds comprised 35.82% of total issuance, up from 35.50%, while taxable bonds made up 5.66%, up from 5.49%.

Some of the most actively traded issues by type were from New York, Utah and California.

In the GO bond sector, the New York City zeros of 2042 were traded 30 times. In the revenue bond sector, the Salt Lake City Airport, Utah, 5s of 2042 were traded 34 times. And in the taxable bond sector, the California 7.5s of 2034 were traded 17 times.

Previous Week's Top Underwriters

The top negotiated and competitive underwriters of last week included Bank of America Merrill Lynch, Citigroup, Morgan Stanley, Raymond James and Piper Jaffray, according to Thomson Reuters data.

In the week of Feb. 12 to Feb. 18, BAML underwrote $1.73 billion, Citi $596.9 million, Morgan Stanley $465 million, Raymond James $355.8 million and Piper Jaffray $286.2 million.

Primary Market

New issue volume is estimated at $3.61 billion, comprised $2.08 billion of negotiated deals and $1.53 billion of competitive sales.

In the competitive arena on Tuesday, Forsyth County, N.C., sold $129.3 million of general obligation bonds in two separate offerings.

Citigroup won the $107.5 million of Series 2017B GO public improvement bonds with a true interest cost of 3.12%. The issue was priced to yield from 0.83% with a 5% coupon in 2018 to 3.54% with a 3.5% coupon in 2037.

Robert W. Baird won the $21.8 million of Series 2017A GO public improvement bonds with a TIC of 2.83%.

The deals are rated triple-A by Moody's Investors Service, S&P Global Ratings and Fitch Ratings.

In the negotiated sector, Citi is expected to price Alabama State Port Authority's $281 million of dock facilities revenue refunding bonds that will feature taxables, alternative-minimum tax and non-AMT bonds. The taxables are scheduled to price on Wednesday and the tax-exempts on Thursday.

The underlying ratings are A-minus by S&P and Fitch. At least a portion of the deal will be insured by Assured Guaranty, which is rated AA by S&P.

Citi is also on the docket to price California Educational Facilities Authority's $184 million of revenue bonds for Loma Linda University, that will feature taxables and tax-exempts. The taxables are slated to price on Wednesday with the tax-exempts expected to price on Thursday. The deal is rated Baa1 by Moody' and A by S&P.

JPMorgan Securities is expected to price the Michigan State Hospital Finance Authority's $178.52 million of refunding and project revenue bonds for Ascension Health Senior Credit Group on Wednesday. The deal is rated Aa2 by Moody's and AA-plus by S&P and Fitch.

Back in the competitive arena, the state of Delaware will sell $225 million of general obligation bonds competitively on Thursday. The deal is rated triple-A by Moody's, S&P and Fitch.

Miami-Dade County will competitively sell $176.93 million of transit system sales surtax revenue refunding bonds on Thursday. The deal is rated AA by S&P and Fitch.

The Port of Seattle will competitively to sell $129.94 million of limited tax GO bonds on Thursday. The deal is rated triple-A by Moody's and S&P and AA-minus by Fitch.

Bond Buyer Visible Supply

The Bond Buyer's 30-day visible supply calendar increased $776.6 million to $9.28 billion on Tuesday. The total is comprised of $4.47 billion of competitive sales and $4.81 billion of negotiated deals.

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