The municipal market and its participants got a few competitive deals, while awaiting the conclusion of the two-day Federal Open Market Committee meeting Wednesday, when the future path of interest rates becomes clearer.

"While the FOMC is expected to raise short-term rates by 25 basis points this week, the heavy lifting comes with how the policy statement is crafted, any move on the dot-plot matrix with revisions to the summary of economic forecasts and how Chair Powell navigates his first press conference," said Jeffery Lipton, manging director, head of municipal research and strategy and fixed income research at Oppenheimer. "While we still think three rate hikes in 2018 are appropriate, a direct message that the Fed is concerned with potentially overheating conditions could portend that fourth rate increase in 2018."

Lipton also said that for muni bonds, technical factors remain impactful with an unusually heavy tone gripping the market for much of the first quarter.

"Negative performance is being contained as new issue volume significantly trails year over year issuance with still uninspiring visible supply figures," he said. "Muni price discovery has been challenging as heavy pull-ahead volume in November and December largely displaced Q1 2018 product."

Primary market
In the competitive arena on Tuesday, highly rated Anne Arundel County, Md., sold $263.66 million of Series 2018 GOs consisting of consolidated general improvement bonds and consolidated water and sewer bonds. The bonds were won by Goldman Sachs with a true interest cost of 3.54%. The deal is rated Aa1 by Moody’s and AAA by S&P Global Ratings.

Also on Tuesday, the city and county of San Francisco sold $251.35 million of GOs, consisting of Series 2018A clean and safe neighborhood parks bonds of 2012, and Series 2018B transportation and road improvement bonds of 2014. The bonds were won by BAML with a TIC of 3.096%.

Since 2008 the City and County of San Francisco has sold about $5.8 billion of securities, with the most issuance occurring in 2017 when it sold $1.04 billion and the least in 2013 when it sold $306 million. The deal is rated Aaa by Moody’s and AA-plus by S&P and Fitch.

Tuesday’s bond sales

Anne Arundel County:
Click here for the $263.655M sale

SF City and County:
Click here for the $251.345M sale

Bond Buyer 30-day visible supply at $6.83B
The Bond Buyer's 30-day visible supply calendar decreased $16.5 million to $6.83 billion on Tuesday. The total is comprised of $3.25 billion of competitive sales and $3.58 billion of negotiated deals.

Previous session's activity
The Municipal Securities Rulemaking Board reported 37,305 trades on Monday on volume of $7.860 billion.

New York, California and Texas were the states with the most trades, with the Empire State taking 13.713% of the market, the Golden State taking 13.547% and the Lone Star State taking 9.013%.

Treasury 4-weeks auctioned
The Treasury Department Tuesday auctioned $65 billion of four-week bills at a 1.720% high yield, a price of 99.866222.

The coupon equivalent was 1.746%. The bid-to-cover ratio was 2.88.

Tenders at the high rate were allotted 68.13%. The median rate was 1.670%. The low rate was 1.630%.


Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Vanessa Kim at 212-803-8474 for more information.

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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.
Christine Albano

Christine Albano

Christine Albano is a reporter in the Investor’s & Investing beat, which she has covered for the past two decades. She has a wide range of buy side sources in the municipal market.