The primary market is set to heat up next week, as buyers will be chomping at the bit for what is expected to be the second highest volume total of the year.

Ipreo estimates volume will perk up to $11.78 billion, after a revised total of $3.47 billion sold in the past week, according to updated figures from Thomson Reuters. The calendar for the week ahead is composed of $7.74 billion of negotiated deals and $4.04 billion of competitive sales.

There are 29 deals on the schedule that are $100 million or greater, including 10 competitive sales. The last week with a higher estimated volume total, was the week of Jan. 16, when it was estimated at $13.7 billion. In recent weeks, the volume hasn't kept up with demand.

Dan Heckman, senior fixed income strategist at U.S. Bank Wealth Management.
Dan Heckman, U.S. Bank Wealth Management
Dan Heckman

“The supply is very much needed and unless something unusual happens, it should be absorbed pretty easily,” said Dan Heckman, senior fixed income strategist at U.S. Bank Wealth Management. “The market will soften a little bit with the uptick in volume, which will help overall and create better value and more buying opportunities.”

While Heckman doesn’t think that this week’s volume is the start of a huge upswing in volume, it could herald a pick up in the supply.

“We won’t have heavy volume like this every week or even most weeks, but longer-term rates are down and the spreads are very tight," he said. "In my opinion it is an advantageous time for issuers to come to market, We are keeping on fingers crossed that this could spark somewhat of a change, for a bit more volume each week.”

According to Municipal Market Data, the 2017 weekly average for new issue volume stands at $6.3 billion. Market sources have indicated to that on average, deals have been oversubscribed by more than 4 times.

“There is definitely a sense still that there is a lot of cash sitting on the sidelines and demand continues to be very strong," Heckman said.

Market participants will have options across the board when it comes to ratings, as the larger deals that are scheduled range from Georgia’s triple-A rated bonds to the American Dream bonds which are not rated.

The Peach State is expected to sell roughly $1.41 billion of general obligation bonds sold in four separate competitive sales on Tuesday. The sales will include $430.54 million and $358.11 million of straight GO bonds, $352.45 million of GO refunding bonds and $273.45 million of taxable GO bonds. All of the deals are rated triple-A by Moody’s Investors Service, S&P Global Ratings and Fitch Ratings.

The New York City Transitional Finance Authority is set to sell roughly $1.05 billion spread throughout one negotiated deal and two competitive sales all taking place on Wednesday. Loop Capital Markets is expected to run the books on the $800 million negotiated future tax secured subordinate bonds, following a two-day retail order period.

The authority will also sell two competitive sales totaling $250 million of taxable negotiated future tax secured subordinate bonds. The deals are rated Aa1 by Moody’s and triple-A by S&P and Fitch.

Loop is also scheduled to price Chicago O’Hare’s $825.125 million of general airport senior lien revenue refunding bonds featuring both non-alternative minimum tax and AMT bonds on Tuesday. The deal is rated A by S&P and Fitch.

Goldman is slated to price the $1.1 billion of limited obligation pilot revenue bonds for the American Dream at the Meadowlands Project bonds in two sales. The $800 million and $300 million negotiated deals were originally scheduled to price the previous week, but market sources informed the Bond Buyer that because of some logistical issues, it would be coming this coming week. Goldman confirmed the deal will come in the week of June 19, but wouldn't specify an exact date.

In the competitive arena, the state of Massachusetts is selling roughly $784.85 million of GO consolidated loan and GO refunding bonds in three separate sales on Tuesday. The deals are rated Aa1 by Moody’s, AA by S&P and AA-plus by Fitch.

Secondary market
Top shelf municipal bonds finished unchanged on Friday. The yield on the 10-year benchmark muni general obligation was steady from 1.86% on Thursday, while the 30-year GO yield was flat from 2.70%, according to the final read of MMD's triple-A scale.

Treasuries were mixed on Friday. The yield on the two-year Treasury declined to 1.32% from 1.35% on Thursday, the 10-year Treasury yield dropped to 1.15% from 2.16% and the yield on the 30-year Treasury bond was unchanged from 2.78%.

The 10-year muni to Treasury ratio was calculated at 86.3% on Friday, compared with 86.1% on Thursday, while the 30-year muni to Treasury ratio stood at 97.1% versus 97.1%, according to MMD.

MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 41,228 trades on Thursday on volume of $10.28 billion.

Week's actively traded issues
Some of the most actively traded bonds by type in the week ended June 16 were from New York, California and Illinois issuers, according to Markit.

In the GO bond sector, the New York City 0s of 2038 were traded 21 times. In the revenue bond sector, the Riverside County, Calif., 2s of 2018 were traded 51 times. And in the taxable bond sector, the Illinois 5.1s of 2033 were traded 17 times.

Week's actively quoted issues
Louisiana, Massachusetts and California names were among the most actively quoted bonds in the week ended June 16, according to Markit.

On the bid side, the Louisiana Local Government Environmental Facilities and Community Development Corp. revenue 5.875s of 2040 were quoted by 64 unique dealers. On the ask side, the Massachusetts GO 4s of 2046 were quoted by 126 unique dealers. And among two-sided quotes, the California taxable 7.35s of 2046 were quoted by 126 unique dealers.

Lipper: Muni bond funds see inflows
Investors in municipal bond funds continued to put cash back into the funds in the latest week, according to Lipper data released late on Thursday.

The weekly reporters saw $394.878 million of inflows in the week ended June 14, after inflows of $985.092 million in the previous week.

The four-week moving average was positive at $430.908 million, after being in the green at $438.868 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 had inflows of $326.028 million in the latest week after inflows of $636.005 million in the previous week. Intermediate-term funds had inflows of $70.283 million after inflows of $97.336 million in the prior week.

National funds had inflows of $394.948 million after inflows of $947.171 million in the previous week. High-yield muni funds reported inflows of $235.860 million in the latest reporting week, after inflows of $336.996 million the previous week.

Exchange traded funds saw inflows of $85.244 million, after inflows of $113.843 million in the previous week.

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Aaron Weitzman

Aaron Weitzman

Aaron Weitzman is a markets reporter for The Bond Buyer, focusing on the sell side of the municipal bond market.
Chip Barnett

Chip Barnett

Chip Barnett is a journalist with more than 40 years of experience. Barnett is currently Senior Market Reporter for The Bond Buyer.