As tax reform looms, traders await new deals amid rising yields
Municipal bond traders will see a chunky new issue calendar this week as the market’s focus will be on Washington, where Congress will continue to work on tax reform legislation.
Issuers and buyers will also be eyeing yields, which have been rising in the past few trading sessions.
AP-MBIS 10-year muni at 2.278%, 30-year at 2.793%
The Associated Press-MBIS municipal non-callable 5% GO benchmark scale was mixed in early trading.
The 10-year muni benchmark yield rose to 2.278% on Monday from the final read of 2.272% on Friday, according to Municipal Bond Information Services, a national consortium of municipal interdealer brokers. The AP-MBIS 30-year benchmark muni yield slipped to 2.793% from 2.794%.
The AP-MBIS benchmark index is a yield curve built on market data aggregated from MBIS member firms and is updated hourly on the Bond Buyer Data Workstation.
U.S. Treasuries were mixed on Monday. The yield on the two-year Treasury rose to 1.66% from 1.65%, the 10-year Treasury yield dropped to 2.38% from 2.40% and the yield on the 30-year Treasury decreased to 2.85% from 2.88%.
Municipal bonds ended weaker on Friday. The yield on the 10-year benchmark muni general obligation rose five basis points to 1.98% from 1.93% on Thursday, while the 30-year GO yield rose six basis points to 2.68% from 2.62%, according to a read of Municipal Market Data's triple-A scale.
On Friday, the 10-year muni-to-Treasury ratio was calculated at 82.6% compared with 83.0% on Wednesday, while the 30-year muni-to-Treasury ratio stood at 93.1% versus 93.5%, according to MMD.
MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 29,840 trades on Friday on volume of $7.80 billion.
Prior week's actively traded issues
Revenue bonds comprised 55.82% of new issuance in the week ended Nov. 10, up from 55.47% in the previous week, according to Markit. General obligation bonds made up 38.78% of total issuance, down from 38.96%, while taxable bonds accounted for 5.40%, down from 5.57%.
Some of the most actively traded bonds by type in the week ended Nov. 10 were from California, Virginia and Texas issuers.
In the GO bond sector, the San Diego Unified School District, Calif., 4s of 2047 were traded 39 times. In the revenue bond sector, the Virginia Small Business Financing Authority 5s of 2056 were traded 97 times. And in the taxable bond sector, the University of Texas 3.376s of 2047 were traded 39 times.
Previous week's top underwriters
The top municipal bond underwriters of last week included JPMorgan Securities, Bank of America Merrill Lynch, Citigroup, Goldman Sachs and Siebert Cisneros Shank, according to Thomson Reuters data.
In the week of Nov. 5 to Nov. 11, JPMorgan underwrote $1.53 billion, BAML $1.44 billion, Citi $1.43 million, Goldman $820.8 million, and SCSCO $721.0 million.
JPMorgan Securities is set to price the Chicago’s Board of Education’s $922.33 million of dedicated capital improvement tax and unlimited tax general obligation with dedicated revenue bonds. The CIT bonds, which are slated to price on Wednesday, are rated A by Fitch Ratings. The GO bonds, which are expected to price Thursday, are rated B by S&P Global Ratings and BB-minus by Fitch.
Citigroup is expected to price the Metropolitan Pier and Exposition Authority’s $475 million of McCormick Place expansion project bonds and refunding bonds on Tuesday. The deal is rated BB-plus by S&P and BBB-minus by Fitch.
Loop Capital is expected to price Illinois State Toll Highway Authority’s $300 million of toll senior revenue bonds on Wednesday. The deal is rated Aa3 by Moody’s and AA-minus by S&P and Fitch.
Barclays Capital is scheduled to price New York City Municipal Water Finance Authority’s $400 million of water and sewer system second general resolution revenue bonds on Tuesday after a one-day retail order period. The deal is rated Aa1 by Moody’s Investors Service and AA-plus by S&P and Fitch.
In the competitive arena, Washington state is selling $505.81 million of various purpose GO refunding bonds on Tuesday. The deal is rated Aa1 by Moody’s and AA-plus by S&P and Fitch.
Also on Tuesday, Wisconsin is set to sell $277.71 million of GOs. The deal is rated AA-plus by Fitch.
Bond Buyer reports 30-day visible supply
The Bond Buyer's 30-day visible supply calendar increased $3.23 billion to $9.40 billion on Monday. The total is comprised of $2.84 billion of competitive sales and $6.56 billion of negotiated deals.