Investors who have been waiting on the sidelines amid volatile financial markets will be rewarded for their patience with the year's biggest weekly issuance calendar, including a deal from the No. 1 issuer.
Ipreo estimates volume will rise from the crypt to $7.52 billion, from the revised total of $3.08 billion sold in the past week, according to updated figures from Thomson Reuters. The calendar for the week ahead is composed of $5.12 billion of negotiated deals and $2.40 billion in competitive sales.
Dan Heckman, senior fixed income strategist at U.S. Bank Wealth Management, said that the firm is ready to buy in munis because they they represent good value and that investors should and will turn to munis.
“There will continue to be lots of volatility going forward, I think we will start to see inflows back into muni bond funds, but there is a definite lack of supply,” he said. “The big deals are few and far between, so when big names come to market and come with size at that, the sale should go well as investors are starved for muni paper.”
The calendar has 13 deals scheduled of $100 million or larger and two greater than $1 billion.
The reigning top municipal bond issuer, the State of California, is set for its first sale of the year. Morgan Stanley is scheduled to price its $2.1 billion of general obligation various purpose and refunding bonds on Wednesday after a one day retail order period. The deal is rated Aa3 by Moody’s Investors Service, AA by S&P Global Ratings and AA-minus by Fitch Ratings.
Bank of America Merrill Lynch is slated to price the Oklahoma Development Finance Authority’s $1.2 billion of health system revenue and taxable bonds for the Oklahoma University Medicine Project on Tuesday. The deal is rated Baa3 by Moody’s and BB-plus by S&P but portions of the deal are expected to be insured by Assured Guaranty Municipal Corp., and will be rated AA by S&P.
“We are all licking our lips looking at what’s on tap for upcoming week,” said one New York trader. “Both the big deals should be blowouts. The Cal deal for obvious reasons such as dry issuance in general and top dogs like Cal always goes quickly. The other big one should be a home run for whatever is not insured, as investors are always looking for yield. Even the insured maturities, based on recent insured transactions such as Pa. tobacco deal should go swimmingly.”
Week's actively traded issues
Some of the most actively traded bonds by type in the week ended March 2 were from New York, Pennsylvania and Washington, D.C. issuers, according to Markit.
In the GO bond sector, the New York City 4s of 2036 traded 44 times. In the revenue bond sector, the Pennsylvania Commonwealth Financing Authority tobacco 4s of 2039 traded 58 times. And in the taxable bond sector, the D.C. Convention Center and Sports Authority 4.312s of 2040 traded 31 times.
Week's actively quoted issues
Pennsylvania, D.C. and California names were among the most actively quoted bonds in the week ended March 2, according to Markit.
On the bid side, the Pennsylvania Commonwealth Financing Authority tobacco revenue 4s of 2039 were quoted by 38 unique dealers. On the ask side, the Washington Metropolitan Airports Authority revenue 5s of 2024 were quoted by 105 dealers. And among two-sided quotes, the California taxable 7.55s of 2039 were quoted by 20 unique dealers.
Previous session's activity
The Municipal Securities Rulemaking Board reported 40,939 trades on Thursday on volume of $14.13 billion.
California, Texas and New York were the states with the most trades, with the Golden State taking 16.782% of the market, the Empire State taking 11.437% and the Lone Star State taking 9.317%.
Lipper: Muni bond funds saw outflows
Investors in municipal bond funds once again reversed course and pulled cash out of the funds in the latest week, according to Lipper data released on Thursday.
The weekly reporters saw $590.943 million of outflows in the week of Feb. 28, after inflows of $347.403 million in the previous week.
Exchange traded funds reported inflows of $1.276 million, after outflows of $18.979 million in the previous week. Ex-ETFs, muni funds saw $592.219 million of outflows, after inflows of $366.381 million in the previous week.
The four-week moving average was negative at $3.010 million, after being in the green at $203.707 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 $492.084 million in the latest week after outflows of $56.672 million in the previous week. Intermediate-term funds had inflows of $29.617 million after inflows of $491.709 million in the prior week.
National funds had outflows of $373.190 million after inflows of $354.086 million in the previous week. High-yield muni funds reported outflows of $221.998 million in the latest week, after outflows of $5.074 million the previous 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. Click here for a brief tour of the Workstation, or contact Vanessa Kim at 212-803-8474 for more information.