Municipal market participants will get back to work and find their hands full, with $9 billion of new issuance forecast for the primary market in the coming week.

Ipreo estimates volume will perk up to $9.29 billion, from the revised total of $256 million sold in the July 4 holiday-shortened week, according to updated figures from Thomson Reuters. The calendar for the week ahead is composed of $7.94 billion of negotiated deals and $1.35 billion of competitive sales.

After what was essentially an off week, muni traders and other market participants will have lots of deals to choose from, with ratings ranging from top-notch triple-A to BBB.

There are 19 tax-exempt negotiated deals on the calendar for greater than $100 million, four of those in the competitive arena.

“Everyone is ready to get back to work,” said one New York trader.

The market has been mostly issuer friendly, with the exception of a brief period during the last week of June when yields starting rising, capped by a seven point spike on the 10-year and five points on the 30-year on Thursday of that week.

“I think that the market backing off the last couple of weeks will be helpful in creating demand,” one portfolio manager said. “Treasuries stabilizing would be very helpful, of course. There still seems to be plenty of cash out there.”

He said market conditions are likely to improve with people coming back to work and a decent amount of new issuance to work on.

“This should help the market establish levels,” he said. "The secondary has been quiet except for the Illinois credits.”

Bank of America Merrill Lynch - the top municipal underwriter for the first half of the year, will run the books on the largest deal of the week. The New York City Transitional Finance Authority is on the docket to sell $1 billion of building aid revenue bonds on Wednesday, after a two-day retail order period. The deal is rated Aa2 by Moody’s Investors Service and AA by S&P Global Ratings and Fitch Ratings.

Goldman Sachs is scheduled to price the Port Authority’s $828.63 million of consolidated bonds, including alternative minimum tax bonds on Thursday after a one-day retail order period. The deal is rated Aa3 by Moody’s and AA-minus by S&P and Fitch.

Citi is slated to price the Pennsylvania Turnpike Commission’s $770 million of subordinate revenue and motor license fund enhanced turnpike special revenue refunding bonds on Thursday.

The largest competitive deal will sell on Tuesday when Lewisville Independent School District, Texas’ $202.525 million of unlimited tax school building bonds are auctioned. The deal is backed by the Texas Permanent School Fund and is rated triple-A by S&P.

There are some “challenged” credits coming to market, including $348 million from Philadelphia, $344 million from Jefferson County, Ala. and $230 million from the Chicago Transit Authority.

While not on the calendar, the Chicago Board of Education is trying to tee up a sale and wants to get it done quickly, market sources indicated.

“I think Jeff County as an improving credit will have very good demand – improving story, with some yield,” the portfolio manager said. “The most challenging is likely to be the BOE. How much capacity remains for their paper, particularly as its coming non-rated, is questionable. “

Secondary market
Top shelf municipal bonds ended weaker on Friday. The yield on the 10-year benchmark muni general obligation rose two basis points to 2.05% from 2.03% on Thursday, while the 30-year GO yield increased three basis points to 2.85% from 2.82%, according to the final read of Municipal Market Data's triple-A scale.

Treasuries were mixed on Friday. The yield on the two-year Treasury was flat from 1.40% on Thursday, the 10-year Treasury yield rose to 2.39% from 2.37% and the yield on the 30-year Treasury bond increased to 2.93% from 2.90%.

The 10-year muni to Treasury ratio was calculated at 85.7% on Friday, compared with 85.7% on Thursday, while the 30-year muni to Treasury ratio stood at 97.1% versus 97.1%, according to MMD.

Week's actively traded issues
Some of the most actively traded bonds by type in the week ended July 7 were from California, Pennsylvania and Illinois issuers, according to Markit.

In the GO bond sector, the California 6.5s of 2033 were traded 30 times. In the revenue bond sector, the Allentown Neighborhood Improvement Zone Development Authority, Pa., 5s of 2042 were traded 42 times. And in the taxable bond sector, the Illinois 5.1s of 2033 were traded 60 times.

Week's actively quoted issues
Illinois and Georgia names were among the most actively quoted bonds in the week ended July 7, according to Markit.

On the bid side, the Illinois taxable 5.1s of 2033 were quoted by 122 unique dealers. On the ask side, the Georgia GO 3s of 2034 were quoted by 191 unique dealers. And among two-sided quotes, the Illinois taxable 5.1s of 2033 were quoted by 53 unique dealers.

Lipper: Muni bond funds see outflows
Investors in municipal bond funds took cash out of the funds in the latest week, according to Lipper data. The weekly reporters saw $458.306 million of outflows in the week of July 5, after inflows of $496.355 million in the previous week.

The four-week moving average turned negative at $114.416 million, after being in the green at $246.434 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 outflows of $305.061 million in the latest week after inflows of $347.179 million in the previous week. Intermediate-term funds had outflows of $106.962 million after inflows of $48.313 million in the prior week.

National funds had outflows of $402.531 million after inflows of $528.345 million in the previous week. High-yield muni funds reported outflows of $208.683 million in the latest reporting week, after inflows of $224.042 million the previous week.

Exchange traded funds saw inflows of $2.624 million, after inflows of $83.810 million in the previous week.

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