Top-rated municipal bonds were weaker in quiet activity at mid-session, according to traders, who returned to work on Tuesday after a long holiday weekend. The market closed early last Friday and remained closed on Monday for Memorial Day.
Secondary Market
The yield on 10-year benchmark muni general obligation was as much as one basis point stronger from 1.66% on Thursday, while the 30-year muni yield was as much as one basis point stronger from 2.45%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were weaker on Tuesday. The yield on the two-year Treasury rose to 0.90% from 0.88% on Friday, while the 10-year Treasury yield gained to 1.85% from 1.83% and the yield on the 30-year Treasury bond increased to 2.65% from 2.64%.
The 10-year muni to Treasury ratio was calculated at 90.5% on Friday compared to 91.2% on Thursday, while the 30-year muni to Treasury ratio stood at 92.8% versus 93.2%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 18,714 trades on Friday on volume of $5.02 billion.
Prior Week's Actively Traded Issues
Revenue bonds comprised 53.06% of new issuance in the week ended May 27, down from 53.32% in the previous week, according to data released by Markit.
General obligation bonds comprised 39.99% of total issuance, up from 39.62%, while taxable bonds made up 6.95%, down from 7.06%.
Some of the most actively traded issues by type were from New York and Virginia issuers. In the GO bond sector, New York City 4s of 2033 traded 67 times. In the revenue bond sector, the N.Y. MTA 5s of 2036 traded 55 times. And in the taxable bond sector, the Virginia HDA 3.1s of 2041 traded 21 times, Markit said.
Previous Week's Top Underwriters
The top negotiated and competitive underwriters of last week included JPMorgan Securities, Bank of America Merrill Lynch, RBC Capital Markets, PNC Financial Services and Citigroup, according to Thomson Reuters data. In the week of May 22-28, JPMorgan underwrote $1.23 billion, BAML did $1.18 billion, RBC had $866 million, PNC did $710 million and RBC had $701 million.
Primary Market
Buyers are looking ahead to the upcoming week's $4.57 billion calendar, which is composed of $3.02 billion of negotiated deals and $1.55 billion of competitive sales.
On Wednesday, Pennsylvania will competitively sell $990.55 million of unlimited tax general obligation bonds consisting of $355 million of First Series of 2016 bonds and $635.55 million of First Refunding Series of 2016 bonds.
Public Financial Management is the financial advisor on the sale and Ballard Spahr is bond counsel.
The Keystone State sold two competitive offerings in 2015 totaling over $2 billion. On May 27, 2015, Bank of America Merrill Lynch won $1.24 billion of Series of 2015 GOs with a true interest cost of 3.59%. On Feb. 3, 2015, BAML won $1 billion of First Series of 2015 GOs with a TIC of 2.99%.
The bonds are rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.
Also on Wednesday, Goldman Sachs is set to price the Illinois Finance Authority's $134.24 million of revenue refunding bonds for the Northwest Community hospital. The deal is rated A2 by Moody's and A-plus by S&P.
RBC Capital Markets is expected to price Pima County, Ariz.'s $125.53 million of GO refunding bonds on Wednesday. The deal is rated AA-minus by S&P and Fitch.
Morgan Stanley is set to price the Dauphin County General Authority, Pa.'s $100 million of Series 2016A health system revenue bonds for the Pinnacle Health System on Wednesday.
On Thursday, the Dormitory Authority of the State of New York is coming to market with two separate negotiated deals totaling over $836 million.
Morgan Stanley will price DASNY's $589.98 million of Series 2016A tax-exempt revenue bonds for New York University while Wells Fargo Securities will price DANY's $246.38 million of Series 2016B taxable revenue bonds for New York University.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $952.6 million to $10.26 billion on Tuesday. The total is comprised of $7.28 billion of competitive sales and $2.98 billion of negotiated deals.
