Munis Stronger as Conn., San Jose Deals Price for Retail

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Top-rated municipal bonds were stronger at mid-session, according to traders, as two big deals from Connecticut and San Jose were priced for retail investors.

Secondary Market

The yield on the 10-year benchmark muni general obligation declined one to three basis points from 2.28% on Friday, while the 30-year GO yield dropped two to four basis points from 3.07%, according to a read of Municipal Market Data's triple-A scale.

U.S. Treasuries were stronger on Monday. The yield on the two-year fell to 1.24% from 1.25% on Friday, while the 10-year Treasury yield declined to 2.38% from 2.41%, and the yield on the 30-year Treasury bond decreased to 2.99% from 3.01%.

On Friday, the 10-year muni to Treasury ratio was calculated at 95.3% compared with 94.4% on Thursday, while the 30-year muni to Treasury ratio stood at 102.4%, versus 101.4%, according to MMD.

MSRB: Previous Session's Activity

The Municipal Securities Rulemaking Board reported 33,580 trades on Friday on volume of $10.16 billion.

Prior Week's Actively Traded Issues

Revenue bonds comprised 58.39% of new issuance in the week ended March 24, down from 58.69% in the previous week, according to Markit. General obligation bonds comprised 36.02% of total issuance, up from 35.64%, while taxable bonds made up 5.59%, down from 5.67%.

Some of the most actively traded issues by type were from Massachusetts, New York and Puerto Rico. In the GO bond sector, the Massachusetts 2s of 2017 were traded 23 times. In the revenue bond sector, the New York Metropolitan Transportation Authority 5s of 2017 were traded 48 times. And in the taxable bond sector, the Puerto Rico Public Buildings Authority 5.65s of 2028 were traded 20 times.

Previous Week's Top Underwriters

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

In the week of March 19 to March 25, BAML underwrote $1.15 billion, Citi $429.7 million, Morgan Stanley $393.9 million, Piper $361.3 million and Stifel $272 million.

Primary Market

Citigroup priced Connecticut's $750 million of general obligation and GO refunding bonds for retail investors on Monday ahead of the institutional pricing on Tuesday.

The $550 million of Series 2017A GOs were priced to yield from 1.63% with a 3% coupon in half of a 2020 maturity to 3.60% with a 5% coupon in 2035; a 2037 maturity was priced at par to yield 4%. The 2018 and 2019 maturities were offered as sealed bids. No retail orders were taken in the other halves of the 2020-2027 maturities.

The $200 million of Series 2017B refunding GOs were priced as 5s to yield from 1.63% in 2020 to 3.09% in 2028. The 2018 and 2019 maturities were offered as sealed bids.

The deal is rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings, Fitch Ratings and Kroll Bond Rating Agency.

Citi also priced San Jose, Calif.'s $630.47 million of airport revenue refunding bonds for retail investors ahead of the institutional pricing on Tuesday.

The $478.17 million of Series 2017A bonds subject to the alternative minimum tax were priced as 5s to yield from 1.30% in 2019 to 3.81% in 2037; a 2041 maturity was priced as 5s to yield 3.86% and a 2042 maturity was priced as 4s to yield 4.17%. No retail orders were taken in the 2047 maturity. A 2018 maturity was offered as a sealed bid.

The $152.3 million of Series 2017B non-AMT bonds were priced to yield from 1.20% with a 3% coupon in 2019 to 3.51% with a 5% coupon in 2037; a 2041 maturity was priced as 5s to yield 3.56%, a 2042 maturity was priced as 4s to yield 4.04%. No retail orders were taken in the 2047 maturity. A 2018 maturity was offered as a sealed bid.

The deal is rated A2 by Moody's and A-minus by S&P and Fitch except for the Series 2017A $28.35 million 2042 maturity which is insured by Build America Mutual and rated AA by S&P.

On Tuesday, RBC Capital Markets is expected to price the Glendale Community College District of Los Angeles County, Calif.'s $122 million of Series A election of 2016 GOs. The deal is rated Aa2 by Moody's and AA-minus by S&P.

RBC is also set to price the New York Metropolitan Transportation Authority's $100 million of variable-rate refunding bonds, Subseries 2002D-2A Libor floating-rate tender notes on Tuesday. The deal is rated A1 by Moody's and AA-minus by S&P.

In the competitive arena on Tuesday, Guilford County, N.C., is selling $196.27 million of bonds in two separate sales consisting of $169.07 million of Series 2017B public improvement GOs and $27.2 million of Series 2017A public improvement GOs.

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

Bond Buyer Visible Supply

The Bond Buyer's 30-day visible supply calendar increased $277.1 million to $10.95 billion on Monday. The total is comprised of $3.25 billion of competitive sales and $7.70 billion of negotiated deals.

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