The municipal bond market will see the lowest amount of issuance in a single week so far this year: an estimated $784 million, with only one deal greater than $100 million. With Thanksgiving right around the corner, the action in the primary market will be, as expected, few and far between.
"I am not surprised to see a light calendar next week," said Alan Schankel, managing director at Janney Capital Markets. "Last year's Thanksgiving week had less than $100 million."
The low volume is made up of $652 million of negotiated deals and $132 million of competitive sales.
"What deals do price will find buyers because it has recently been more of a seller's market. Fund flows have been positive for about 7 weeks and this [past] week's supply did well, as several deals [got] bumped for the final pricing," Schankel said.
RBC Capital Markets is expected to price the largest deal on the schedule for next week – Minnesota Housing Finance Agency's $136.445 million of residential housing finance bonds, Series' 2015 E alternative minimum tax and F non-AMT. According to the official statement, the series E bonds will be for roughly $96.930 million and the series F bonds for $39.515 million. Kutak Rock LLP is expected to serve as bond counsel and CSG advisors are listed as the financial advisor on the deal. The deal is rated Aa1 by Moody's Investors Service and AA-plus by Standard and Poor's.
The next largest negotiated deal will also be priced on Tuesday, as Wells Fargo Securities is scheduled to price the Mississippi Development Bank Municipal Energy Agency's $86.72 million of power supply refunding bonds. The deal is slated to maturity serially from 2016-2035 and include a term bond in 2041. The at least part of the deal is to be insured by Assured Guaranty and is rated A2 by Moody's and AA by S&P.
The largest competitive sale will also be coming from the land of 10,000 lakes, as the Farmington Independent School District No., 192 in Minnesota will be selling $33.475 million of GO school building refunding bonds, Series 2015C for the Minnesota School District Enhancement Program.
The school district last sold bonds competitively on Jan. 12, when Bank of America Merrill Lynch won $22.160 million with a true interest cost of 2.39%.
Secondary Market
Municipal yields finished lower again on Friday, pulling yields down from 11 to 14 basis points on the week.
The yield on the 10-year benchmark muni general obligation was down one basis point to 2.06% from 2.07% on Thursday, while the 30-year yield was down one basis point to 3.01% from 3.02%, according to the final read of Municipal Market Data's triple-A scale.
On Friday, Nov. 13, the yield on the 10-year muni stood at 2.17% while the 30-year muni yield was at 3.15%.
Treasury yields were higher on Friday. The two-year Treasury yield rose to 0.90% from 0.88% on Thursday while the 10-year Treasury yield gained to 2.26% from 2.24% and the 30-year yield rose to 3.01% from 2.99%.
The 10-year muni to Treasury ratio was calculated on Friday at 91.1% from 92.1% on Thursday, while the 30-year muni to Treasury ratio stood at 99.8% compared to 100.5%, according to MMD.
The Week's Most Actively Quoted Issues
Illinois, New York and New Jersey and California were some of the most actively quoted names in the week ended Nov. 20, according to data released by Markit.
On the bid side, the Illinois taxable 5.1s of 2033 were quoted by 12 unique dealers. On the ask side, the Port Authority of New York & New Jersey revenue 5s of 2041 were quoted by 18 dealers. And among two-sided quotes, the California taxable 7.55s of 2039 were quoted by 26 dealers, Markit said.
The Week's Most Actively Traded Issues
Some of the most actively traded issues in the week ended Nov. 20 were in New York, Connecticut and California, according to Markit.
In the revenue bond sector, the New York City Municipal Water Finance Authority 5s of 2046 were traded 144 times. In the GO bond sector, the Connecticut 3 1/4s of 2029 were traded 79 times. And in the taxable bond sector, the California 7.55s of 2039 were traded 19 times, Markit said.
