Holiday week slate hits $14.3B, largest supply calendar of 2020

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Municipal new-issue supply will be the largest for 2020 during the holiday-shortened week with more than $14 billion of deals on tap.

IHS Ipreo estimates volume for the upcoming week at $14.3 billion, composed of $11 billion of negotiated deals and $3.3 billion of competitive sales.

Transportation, hospital and taxable deals feature heavily on the list.

Municipals were little changed Friday, with yields on the AAA scales barely budging after seeing weakness early in the week on tenuous political and economic conditions.

Muni yields were up as much as 10 basis points since the previous Friday session as uncertainty and caution were the watchwords for investors.

On Oct. 2, the 10-year muni was yielding 0.88% and the 30-year was yielding 1.63%, according to the MMD scale, compared with Friday's readings on the 10- and 30-year of 0.95% and 1.73%, respectively.

According to Fitch Ratings, the COVID-19 virus could have a big impact on four areas that impact public finance.

In a ratings report this week, Fitch said the key trends to watch in a post-pandemic world are working from home; residential preference shifts; virtual delivery of goods and services; and trends in globalization.

“In many ways, the coronavirus outbreak seems to have accelerated shifts that were already under way,” said Laura Porter, Fitch's global head of public finance and infrastructure. “However, the extent to which the landscape has fundamentally changed can only be truly discerned once pandemic conditions have passed.”

E-commerce has grown dramatically due to the coronavirus, Fitch said, with government tax systems having to make adjustments.

“Virtual offerings provide an additional delivery option that is likely to further reduce traditional demand, making a complete return to pre-pandemic behaviors highly unlikely,” said James Batterman, Fitch senior director.

“Local and regional governments, along with certain transportation assets, are exposed to the largest number of potential permanent changes, although the severity of impact for specific risks could be higher for other sectors,” the report said.

Primary market
Airport deals are at the top of the calendar, with other transportation deals featuring prominently.

The City and County of Denver, Colo., is coming to market with $705.5 million of taxable and $219.4 million of tax-exempt airport system revenue bonds.

Barclays Capital is set to price the bonds, being issued on behalf of Denver’s Department of Aviation, on Thursday.

The taxables are structured as $401 million Series C (A1/A+/AA-/) fixed-rates and $305 million of Series D (A2/A/A+/) subordinate fixed-rate.

The tax-exempts (A1/A+/AA-/) are structured as $97 million of Series 2020-A1 non-AMT private activity fixed-rates, $61 million of 2020-A2 non-AMT governmental fixed-rates, $38 million of Series 2020-B1 AMT fixed-rates and $23 million of Series 2020B-2 AMT term-rates.

Airline deals feature heavily on the list of new bond issues.

The Kansas City Industrial Development Authority, Mo., (A2/A-/A/NR) is coming with $536 million of special obligation airport bonds for the Kansas City International Airport modernization project.

Morgan Stanley is set to price the bonds on Wednesday.

The deal is structured as $478 million of Series 2020A bonds subject to the alternative minimum tax and $57 million of Series 2020B non-AMT bonds.

Other transportation deals include the North Carolina Turnpike Authority (/BBB/BBB/), which is coming to market with $499.46 million of senior lien turnpike revenue bonds anticipation notes for the Triangle Expressway System.

Wells Fargo Securities is expected to price the deal on Thursday.

The Oklahoma Turnpike Authority (Aa3/AA-/AA-/NR) is set to issue $370.385 million of Series 2020A tax-exempt and Series 2020B taxable second senior revenue refunding bonds.

JPMorgan Securities is expected to price the deal for the Oklahoma Turnpike System on Wednesday.

The South Jersey Transportation Authority is offering $325 million of transportation system revenue bonds.

Citigroup is expected to price the deal on Thursday which consists of $299.795 million of Series 2020A senior bonds (Baa2/BBB+/BBB+/NR) and $25.205 million of Series 2020A subordinate bonds (Baa3/BBB/BBB-/NR).

Jacksonville, Fla., (/AA-/AA-/) is competitively selling $154.555 million of taxable transportation refunding revenue bonds on Tuesday.

PFM Financial Advisors is the financial advisor; Greenberg Traurig is the bond counsel.

Elsewhere in the competitive arena the New York City Transitional Finance Authority is selling $334.52 million of bonds in two offerings.

The deals consist of $200 million of Fiscal 2021 Series S-1 building aid revenue bonds selling Wednesday and $134.52 million of NYC recovery bonds selling as a remarketing on Tuesday.

Frasca & Associates and Public Resources Advisory Group are the financial advisors. Norton Rose and Bryant Rabbino are the bond counsel.

Westchester County, N.Y., is selling $125.928 million of bonds in three offerings on Thursday.

The deals consist of $70.966 million of Series 2020A GOs, $51.205 million of Series 2020C taxable refunding GOs and $3.757 million of Series 2020B taxable GOs.

Capital Markets Advisors is the financial advisor; Hawkins Delafield is the bond counsel.

Secondary market

Secondary trading on Friday showed high-grades and recent deals trading in blocks with mixed movements.

The Port of Seattle 5s of 2021, traded at 0.20%. Montgomery County, Maryland 5s of 2022 traded at 0.19%. Maryland 5s of 2023 at 0.22%.

New York City TFA 5s of 2024 at 0.45%-0.42%.

Delaware GOs, 5s of 2026, at 0.37%-0.31% versus 0.41% on Thursday.

Montgomergy County, Maryland 5s of 2026 at 0.53%.

Conroe, Texas ISD 5s of 2030 traded at 1.11%-1.08%, originally priced at 1.09%.

North Carolina GOs, 5s of 2031 at 1.03%-1.00%, originally 1.03%.

Washington GOs 5s of 2033 at 1.36%-1.33%.

Texas waters, 3s of 2032 at 1.82%-1.81% while on Wednesday at 1.79%-1.78%.

Ohio waters, 5s of 2040 at 1.64% after trading the first of the month at 1.56%.

Conroe, Texas ISD 2.25s of 2046 traded at 2.36% after originally pricing at 2.41%.

The most active bond types traded this week were revenue bonds, followed by GOs and taxable, according to IHS Markit said.

High-grade municipals were unchanged on Friday, according to final readings on Refinitiv MMD’s AAA benchmark scale.

Yields in 2021 and 2022 were unchanged at 0.14% and 0.15%, respectively. The yield on the 10-year muni was steady at 0.95% while the 30-year yield was flat at 1.73%.

The 10-year muni-to-Treasury ratio was calculated at 122.7% while the 30-year muni-to-Treasury ratio stood at 110.2%, according to MMD

The ICE AAA municipal yield curve showed maturities unchanged, with the 2021 maturity at 0.13% and the 2022 maturity at 0.15%. The 10-year maturity was unchanged at 0.91% and the 30-year remained at 1.73%.

The 10-year muni-to-Treasury ratio was calculated at 121% while the 30-year muni-to-Treasury ratio stood at 109%, according to ICE.

The IHS Markit municipal analytics AAA curve showed yields at 0.15% in 2021 and 0.16% in 2022 as the 10-year muni rose to 0.97% while the 30-year was unchanged at 1.71%.

The BVAL AAA curve showed the yield on the 2021 maturity unchanged at 0.11%, the 2022 maturity unchanged at 0.13%, the 10-year flat at 0.91% and the 30-year steady at 1.71%.

Treasuries were little changed as stock prices traded higher.

The three-month Treasury note was yielding 0.10%, the 10-year Treasury was yielding 0.78% and the 30-year Treasury was yielding 1.58%.

The Dow rose 0.50%, the S&P 500 increased 0.80% and the Nasdaq gained 1.20%.

Bond Buyer indexes rise
The weekly average yield to maturity of the Bond Buyer Municipal Bond Index, which is based on 40 long-term bond prices, rose three basis points to 3.60% from 3.57% in the previous week.

The Bond Buyer's 20-bond GO Index of 20-year general obligation yields increased 10 basis points to 2.35% from 2.25% in the previous week.

The 11-bond GO Index of higher-grade 11-year GOs increased 10 basis points to 1.88% from 1.78%.

The Bond Buyer's Revenue Bond Index gained nine basis points to 2.77% from 2.67%.

Lynne Funk contibuted to this report.

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Primary bond market Secondary bond market Denver City & County City of Atlanta, GA Hillsborough County Aviation Authority, FL North Carolina Turnpike Authority City of Kansas City, MO