Prices of top-rated municipal bonds closed weaker on Tuesday, as traders got back to work after the Labor Day holiday weekend.
The yield on the 10-year benchmark muni general obligation closed two basis points stronger at 2.20% from 2.18% on Friday, while the yield on the 30-year GO was three basis points stronger at 3.14% from 3.11%, according to the final read of Municipal Market Data's triple-A scale.
Post-holiday trading was light, Interactive Data reported.
Treasury prices were lower on Tuesday, with the yield on the two-year Treasury note rising to 0.74% from 0.70% on Friday, while the 10-year yield rose to 2.19% from 2.12% and the 30-year yield increased to 2.97% from 2.89%.
The 10-year muni to Treasury ratio was calculated on Tuesday at 100.5% versus 102.6% on Friday, while the 30-year muni to Treasury ratio stood at 105.7% compared to 107.6%, according to MMD.
Primary Market
New supply for the week is estimated at $3.71 billion, consisting of $3.13 billion of negotiated deals and $575.1 million of competitive sales.
Jefferies & Co. is scheduled to price Austin, Texas' $307.25 million of public improvement bonds, public property finance contractual obligations, and certificates of obligation on Wednesday. The issue is rated triple-A by Moody's Investors Service, Standard & Poor's and Fitch Ratings.
JPMorgan Securities is expected to price the Allina Health System's $250 million of Series 2015 taxable bonds on Wednesday. The issue is rated Aa3 by Moody's and AA-minus by S&P and Fitch.
In the competitive arena, the University of Washington is selling two separate issues totaling almost $193 million on Wednesday. The sales consist of $155.84 million of Series 2015C general revenue and refunding bonds and $36.79 million of Series 2015D taxable general revenue and refunding bonds. The issues are rated triple-A by Moody's and AA-plus by S&P.
On the day-to-day competitive slate, and selling with 18-hour notice, is a $230 million issue of Series 2015F public education capital outlay refunding bonds from the Florida state Board of Education. Moody's rated the bonds Aa1 while Fitch rates them triple-A.
And in the competitive short-term market, the New York Metropolitan Transportation Authority will sell $500 million of Series 2015A dedicated tax fund bond anticipation notes on Wednesday. The BANs are rated SP1-plus by S&P and F1-plus by Fitch.
Topping the calendar is the North Texas Tollway Authority System's Series 2015B first-tier revenue refunding bonds. The bonds, slated to be priced by Barclays Capital on Thursday, are rated A1 by Moody's Investors Service and A by Standard & Poor's.
RBC Capital Markets is slated to price the University of Oklahoma's general revenue bonds on Thursday consisting of Series 2015C tax-exempts and Series 2015D taxable. The issue is rated A-plus by S&P and AA-minus by Fitch.
"The new issue slate for this holiday-shortened week is modest…assuming that the $750 million Puerto Rico Aqueduct and Sewer Authority (Caa3/CCC-/CC) issue listed as day-to-day does not price," Janney Municipal Strategist Alan Schankel said in a Tuesday market comment.
He added market players were instead focused on Puerto Rico's release of its restructuring blueprint for the commonwealth's debt.
"We suspect investors need to see the commonwealth's plan and assess its impact before committing to further debt purchases," Schankel said.
In secondary trading, prices of Puerto Rico Series 2014A general obligation 8s of 2035 traded at a low price of 74.94 cents on the dollar, a high yield of 11.162%, in eight trades totaling $13.2 million, according to the Municipal Securities Rulemaking Board's EMMA website. Last Friday, the Commonwealth GO 8s traded as low as 75.25, a high yield of 11.113%, but in only two trades totaling $200,000. Last Thursday, the bonds traded at a low price of 73.80, a high yield of 11.345%, in 10 trades totaling $8.25 million, according to EMMA.
Prior Week's Actively Traded Issues by Sector
Revenue bonds comprised 56.92% of new issuance in the week ended Sept. 4, up from 53.81% in the previous week, according to Markit. General obligation bonds comprised 35.08% of total issuance, down from 37.72%, while taxable bonds made up 8.00%, down from 8.47%.
Some of the most actively traded issues in the week were in Connecticut, Puerto Rico and Kansas.
In the revenue bond sector, the Connecticut state Health and Education Facilities Authority 4 1/8s of 2041 were traded 98 times. In the GO bond sector, the Puerto Rico commonwealth 8s of 2035 were traded 36 times. And in the taxable bond sector, the Finney County Unified School District No. 456, Kan., 6.783s of 2034 were traded 16 times, according to Markit.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 22,688 trades on Friday on volume of $3.461 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $773.9 million to $7.15 billion on Friday. The total is comprised of $2.40 billion competitive sales and $4.75 billion of negotiated deals.
