Top shelf municipal bonds were weaker at mid-session, according to traders, as the market gets set to see an $8.16 billion new issue calendar next week.
Volume for next week is estimated by Ipreo at $8.16 billion, up from $5.27 billion this week, according to revised data from Thomson Reuters.
Next week's calendar is composed of $6.42 billion of negotiated deals and $1.74 billion of competitive sales.
Secondary Market
On Friday, the yield on 10-year benchmark muni general obligation was as much as one basis point stronger from 1.42%, a record low it hit on Thursday, while the 30-year muni yield was as much as one basis point stronger from its record low level of 2.13%, according to a midday read of Municipal Market Data's triple-A scale.
U.S. Treasuries were weaker. The yield on the two-year Treasury gained to 0.69% on Friday from 0.68% on Thursday, while the 10-year Treasury yield rose to 1.61% from 1.56% and the yield on the 30-year Treasury bond increased to 2.43% from 2.38%.
On Thursday, the 10-year muni to Treasury ratio was calculated at 87.5% compared to 92.3% on Wednesday, while the 30-year muni to Treasury ratio stood at 88.0% versus 89.6%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 39,962 trades on Thursday on volume of $14.38 billion.
Week's Most Actively Traded Issues
Some of the most actively traded issues by type in the week ended June 17 were from Texas, Massachusetts and New York,
In the GO bond sector, the Harris County, Texas 5s of 2047 were traded 32 times. In the revenue bond sector, the Mass. Development Finance Agency 5s of 2043 were traded 38 times. And in the taxable bond sector, the DASNY 3.879s of 2046 were traded 14 times.
Week's Most Actively Quoted Issues
California and North Carolina issues were among the most actively quoted names in the week ended June 17, according to Markit.
On the bid side, the California taxable 7.55s of 2039 were quoted by 12 unique dealers. On the ask side, the Univ. of N.C. at Wilmington GO 3s of 2036 were quoted by 16 unique dealers. And among two-sided quotes, the California taxable 7.6s of 2040 were quoted by 15 dealers.
Primary Market
While volume was down from the previous week, there was still plenty of action in the primary.
In the competitive arena, Bank of America Merrill Lynch won Illinois' $550 million of Series 2016 general obligation bonds with a true interest cost of 3.7425%. The bonds are rated Baa2 by Moody's Investors Service and BBB-plus by S&P Global Ratings and Fitch Ratings. All three raters have negative outlooks on the credit.
The Florida State Board of Education sold $147.64 million of Series 2016C public education capital outlay refunding bonds. JPMorgan won the issue with a true interest cost of 2.48%. The deal is rated Aa1 by Moody's and triple-A by S&P and Fitch.
Frederick County, Md., sold $119 million of general obligation bonds in two separate transactions, including $85.41 million of Series 2016A GO public facilities bonds and $34.82 million of Series 2016B taxable GO public facilities refunding bonds. Citi won the larger sale with a TIC of 2.27%, while Raymond James won the other sale with a TIC of 2.53%. Both deals are rated triple-A by Moody's, S&P and Fitch.
In the short-term competitive arena, the New York Metropolitan Transportation Authority sold $700 million of bond anticipation notes in two separate sales. Eight groups won the MTA's $350 million of Series 2016A Subseries 2016A-1 dedicated tax BANs while seven groups won the $350 million of Series 2016A Subseries 2016A-2 dedicated tax BANs.
Goldman Sachs priced and repriced the New York State Environmental Facilities Corp.'s $493.32 million of Series 2016A state clean water and drinking water revolving funds revenue bonds, New York City Municipal Water Finance Authority Projects Second Resolution bonds. The deal is rated triple-A by Moody's Investors Service and S&P Global Ratings and AA-plus by Fitch Ratings.
BAML priced the Dutchess County, N.Y., Local Development Corp.'s $378.12 million of Series 2016B revenue and revenue refunding bonds for Health Quest Systems. The deal consisted of $28.115 million of Series 2016A revenue refunding bonds and $350 million of Series 2016B revenue bonds. The issue is rated A3 by Moody's and A-minus by S&P.
JPMorgan Securities priced the Maryland Economic Development Corp.'s $312.42 million of private activity revenue bonds for the Purple Line Light Rail project. The deal is subject to the alternative minimum tax. The deal is expected to be rated BBB-plus by S&P and Fitch and A (low) by DBRS on the Series 2016 A and B bonds and a BBB (high) on the Series 2016 C and D bonds.
JPMorgan also priced the Metropolitan Washington Airports Authority's $376.42 million of Series 2016A and Series 2016B airport system revenue refunding bonds. The deal is rated A1 by Moody's and AA-minus by S&P and Fitch.
JPMorgan additionally priced the California Infrastructure and Economic Development Bank's $140.22 million of Series 2016A infrastructure state revolving fund revenue bonds. The deal is rated triple-A by Moody's, S&P and Fitch.
Citi priced the Peralta Community College District of Alameda County, Calif.'s $157.83 million of general obligation bonds. The deal is rated Aa3 by Moody's and triple-A by Fitch.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $2.79 billion to $11.08 billion on Friday. The total is comprised of $3.42 billion of competitive sales and $7.66 billion of negotiated deals.
Requests for New Muni CUSIPs Up 21% in May
Demand for new municipal CUSIP identifiers rose 21% in May, the fourth straight monthly increase, CUSIP Global Services said in a report released on Thursday.
A total of 1,740 new municipal bond identifier requests were made in May, up from 1,443 in April. On a year-over-year basis, however, May municipal bond identifier requests were down by 2%.
Long-term muni note CUSIP orders rose to 36 in May, compared to 26 requests in March. Short-term note muni CUSIP volume fell to 62 in May from 83 in April.
The report tracks requests by issuers for bond identifiers as an early indicator of new volume and suggests a resurgence of municipal issuance in the next several weeks.
"The sheer volume of requests for IDs for new debt instruments is sending a clear signal that issuers are indeed gearing up for new offerings," Gerard Faulkner, Director of Operations for CUSIP Global Services, said in a press release. "While, at the absolute level, we're still behind where we were at this time last year, the recent trend in month-to-month increases has become hard to ignore."
Regionally, municipal bond issuers in Texas requested the highest volume of new identifiers in May, accounting for 171 CUSIP requests. In the first five months of this year, Texas issuers accounted for the most CUSIP requests at 782, or 10% of total volume. New York came in second with 544 requests.
Muni Bond Funds Again See Inflows
For the 37th straight week, municipal bond funds reported inflows, according to Lipper data released Thursday. Weekly reporting funds saw $904.450 million of inflows in the week ended June 15, after inflows of $852.457 million in the previous week, Lipper said.
The four-week moving average remained positive at $795.129 million after being in the green at $880.275 million in the previous week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds also experienced inflows, gaining $695.817 million in the latest week after inflows of $700.430 million in the previous week. Intermediate-term funds had inflows of $165.993 million after inflows of $212.204 million in the prior week.
National funds had inflows of $767.037 million on top of inflows of $718.562 million in the previous week. High-yield muni funds reported inflows of $323.779 million in the latest reporting week, after inflows of $470.952 million the previous week.
Exchange traded funds saw inflows of $83.241 million, after inflows of $134.964 million in the previous week.
