Municipal bond issuance is set to drop by half as Federal Open Market Committee meets and the third quarter comes to an end in the coming week.
Ipreo forecasts weekly bond volume will drop to $3.1 billion from a revised total of $6.39 billion in the past week, according to updated data from Thomson Reuters. The calendar is composed of $1.87 billion of negotiated deals and $1.26 billion of competitive sales.
“We know that next week’s impending hike is priced in and there is another hike later in the year that’s priced in as well already,” said Tom Weyl, director of municipal research at Wasmer, Schroeder. “We are going to be looking to see if there is a change in the wording of the statement. The focus for next year is, is inflation really rising, or is it temporary? They want to balance the quantitative easing – but do they move the market through balance sheet action or rate action? That is where reading tea leaves in the statement is most important.”
In the competitive arena, Wisconsin is slated to sell the biggest deal of the week on Tuesday when is offers $260.565 million of Series 2018B general obligation bonds. Proceeds of the sale will be used for various governmental purposes.
In the negotiated sector, the Bank of America Merrill Lynch is set to price the Dormitory Authority of the State of New York’s $150 million of Series 2018A revenue bonds on Tuesday after a one-day retail order period.
Ziegler is expected to price the Successor Agency to the Redevelopment Agency of Pomona, California's $130.435 million of taxable Series 2018BI tax allocation refunding bonds on Wednesday.
PNC Capital Markets is set to price the Ohio Higher Educational Facilities Commission’s $113.735 million of Series 2018 hospital revenue bonds for the University Hospital Health System.
Raymond James & Associates is set to price the New Orleans Aviation Board’s $109.24 million of special facilities revenue bonds and refunding bonds on Tuesday.
Secondary market
Municipal bonds were mostly stronger on Friday, according to a late read of the MBIS benchmark scale. Benchmark muni yields fell less than one basis point in the nine- to 28-year maturities. The one- to eight-year maturities saw yields rise by less than a basis point and the final two maturities were flat.
High-grade munis were mixed, with yields calculated on MBIS' AAA scale decreasing less than one basis point in the one- to 11-year and 19- to 23-year maturities, increasing less than a basis point in the 14- to 17-year and 26- to 30-year maturities. The remaining maturities were unchanged.
Municipals were steady on Municipal Market Data’s AAA benchmark scale, which showed the yield on both the 10-year muni general obligation and the yield on 30-year muni maturity remaining unchanged.
On Friday, the 10-year muni-to-Treasury ratio was calculated at 84.4% while the 30-year muni-to-Treasury ratio stood at 100.8%, according to MMD. The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasury with comparable maturities. If the muni/Treasury ratio is above 100%, munis are yielding more than Treasury; if it is below 100%, munis are yielding less.
Week's actively traded issues
Some of the most actively traded munis by type in the week ended Sept. 21 were from Texas, California and Puerto Rico issuers, according to
In the GO bond sector, the Hidalgo County, Texas, 4s of 2043 traded 42 times. In the revenue bond sector, the Long Beach, Calif., 5s of 2020 traded 54 times. And in the taxable bond sector, the Puerto Rico Government Development Bank 5s of 2023 traded 18 times.
Week's actively quoted issues
Ohio, Kentucky and California names were among the most actively quoted bonds in the week ended Sept. 21, according to Markit.
On the bid side, the Ohio Air Quality Development Authority revenue 5.7s of 2020 were quoted by 40 unique dealers. On the ask side, the Kentucky revenue 4s of 2048 were quoted by 265 dealers. And among two-sided quotes, the California taxable 7.5s of 2034 were quoted by 12 dealers.
Lipper: Muni bond funds saw inflows
Investors in municipal bond funds reversed course and put cash into the funds during the latest reporting week, according to Lipper data released on Thursday.
The weekly reporters saw $140.850 million of inflows in the week ended Sept. 19 after outflows of $136.494 million in the previous week.
Exchange traded funds reported inflows of $35.766 million, after outflows of $236.814 million in the previous week. Ex-ETFs, muni funds saw $105.085 million of inflows, after inflows of $100.319 million in the previous week.
The four-week moving average remained positive at $8.742 million, after being in the green at $68.122 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 inflows of $134.403 million in the latest week after outflows of $121.885 million in the previous week. Intermediate-term funds had outflows of $80.745 million after inflows of $81.138 million in the prior week.
National funds had inflows of $158.227 million after outflows of $106.754 million in the previous week. High-yield muni funds reported inflows of $156.236 million in the latest week, after inflows of $160.042 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.
