Municipal bond buyers saw some big note and bond deals hit the market on Wednesday, led by issuers in Georgia and Colorado.
"The muni market continues to grind lower and ratios are trending back down to yearly lows," one southern trader said. "I am not sure how much lower we can go." He added that it feels like the market has fully priced a 50 basis point rate cut, [ahead of next week's Federal Open Market Committee meeting], especially since supply is manageable and inflows continue.
"The near term risk for a backup would be if the Fed does not cut or only cuts 25 basis points, otherwise we are probably range-bound," he said.
Jim Colby, senior municipal strategist and portfolio manager at VanEck, characterized the market as listless, with little desire to move in either direction ahead of the Fed.
"With that said, [there is] plenty of cash-flow buyers participating in the new issue market, where it is easier to point to credit and or maturity structure that suits near-term needs," he said.
Primary market
BofA Securities priced Children's Healthcare of Atlanta, Inc.’s (Aa2/AA+/NR) $884.985 million of bonds on Thursday.
The issue is made up the Brookhaven Development Authority’s $727.845 million of Series 2019A revenue bonds, the DeKalb Private Hospital Authority’s $81.61 million of Series 2019B revenue anticipation certificates and the Development Authority of Fulton County’s $75.53 million of Series 2019C revenue bonds.
Citigroup priced the Massachusetts School Building Authority’s (Aa3/AA/AA+) $300 million of Series 2019A subordinated dedicated sales tax bonds.
In the competitive arena, Miami-Dade County, Florida (NR/AA/AA) sold $163.76 million of Series 2018A general obligation bonds for the Public Health Trust program. BofA Securities won the bonds with a true interest cost of 3.242%. PFM Financial Advisors is the financial advisor; Squire Patton is the bond counsel.
In the short-term sector, Colorado sold $600 million of Series 2019 general fund tax and revenue anticipation notes.
Several groups won the TRANS including including Wells Fargo Securities, RBC Capital Markets and Morgan Stanley. George K. Baum is the financial advisor; Sherman & Howard is the bond counsel.
Wednesday’s sales
NYC to sell $1.9B GOs
New York City announced details of its upcoming sale of about $1.9 billion of general obligation bonds. The offerings are comprised of $938 million of tax-exempt fixed-rate bonds, $600 million of taxable fixed-rate bonds, $200 million of variable-rate demand bonds and $200 million of fixed-rate step coupon bonds.
Ramirez & Co. will price the deal on Wednesday with joint lead manager The Williams Capital Group, with BofA Securities, Citigroup, Goldman Sachs, JPMorgan Securities, Jefferies, Loop Capital Markets, RBC Capital Markets and Siebert Cisneros Shank & Co. as co-senior managers. A two-day retail order period will be held on Monday and Tuesday.
Also on Wednesday, July 24, 2019, the city will competitively sell $600 million of taxable fixed-rate bonds in two offerings.
Proceeds will be used to fund capital projects, with the exception of proceeds from around $538 million of bonds, which will be used to convert existing bonds.
During the week of Aug. 5, the city plans to sell $200 million of fixed rate step coupon bonds, via negotiated sale through an underwriting syndicate led by Morgan Stanley.
And during the week of Aug. 12, the city expects to sell $200 million of variable-rate demand bonds, to be remarketed by Citigroup.
Secondary market
Munis were stronger in late trade on the
On Refinitiv Municipal Market Data’s AAA benchmark scale, the yield on both the 10- and 30-year GOs fell two basis points to 1.56% and 2.27%, respectively.
"The ICE muni yield curve is one to two basis points lower," ICE Data Services said in a market comment. "High-yield and tobaccos are following suit. Taxables are two to fours basis points lower with the 10-year maturities down four basis points."
The 10-year muni-to-Treasury ratio was calculated at 75.7% while the 30-year muni-to-Treasury ratio stood at 88.3%, according to MMD.
Treasuries were stronger as stocks traded mixed. The Treasury three-month was yielding 2.141%, the two-year was yielding 1.834%, the five-year was yielding 1.830%, the 10-year was yielding 2.062% and the 30-year was yielding 2.572%.
Previous session's activity
The MSRB reported 34,682 trades Tuesday on volume of $9.21 billion. The 30-day average trade summary showed on a par amount basis of $11.54 million that customers bought $6.07 million, customers sold $3.49 million and interdealer trades totaled $1.97 million.
California, New York and Texas were most traded, with the Golden State taking 12.797% of the market, the Empire State taking 11.146% and the Lone Star State taking 8.897%.
The most actively traded security was the Illinois Series 2003 GO 5.1s of 2033, which traded 22 times on volume of $37.38 million.
ICI: Muni funds see $2.2B inflow
Long-term municipal bond funds and exchange-traded funds saw a combined inflow of $2.164 billion in the week ended July 10, the Investment Company Institute reported on Wednesday.
It was the 27th straight week of inflows into the tax-exempt mutual funds and followed an inflow of $1.625 billion in the previous week.
Long-term muni funds alone saw an inflow of $1.456 billion after an inflow of $2.215 billion in the previous week; ETF muni funds alone saw an inflow of $170 million after an inflow of $302 million in the prior week.
Taxable bond funds saw combined inflows of $7.694 billion in the latest reporting week after inflows of $8.010 billion in the previous week.
ICI said the total combined estimated inflows from all long-term mutual funds and ETFs were $11.393 billion after outflows of $18.737 billion in the prior week.
Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation.
