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It's a wrap: Munis end on a quiet note

The municipal bond market finished out the last day of 2019 on a quiet note, with no deals priced and yields ending little changed.

Seasonal sluggishness hit the municipal market as participants and investors paused to prepare for the arrival of the New Year and new decade.

“The market is dead — it’s really the second week of dead,” said John Mousseau, president of Cumberland Advisors.

“This happens when the holidays fall on a Wednesday,” he said just before the market’s early close at 2 p.m. “Any early supply will be gobbled up by rollover,” he continued. “It will probably be a seller’s market in the start of the year.”

Primary market
Tuesday’s trading was abbreviated ahead of the New Year’s Day holiday, and market participants will return to work on Thursday facing a very quiet end to the week.

But the silence won’t last for long, as next week’s calendar is shaping up to be another hefty one.

“The slow Januarys of the past few years will not repeat in 2020,” Janney said in a Tuesday market comment. “New offerings totaling about $8.5 billion are already scheduled to price next week, with more being added each day, including yesterday’s addition of $325 million New Jersey GO for competitive sale on Tuesday, divided between taxable and tax free series.”

New Jersey (A3/A-/A/A) will sell its bonds on Tuesday. Acacia Financial Group is the financial advisor; Eckert Seamans is the bond counsel;

“Although New Jersey is a prolific bond issuer, general obligation issues are rare since the state does most of its financing through appropriation-backed debt such as the N.J. Transportation Trust Fund (Baa1/BBB+/A-) with about $20B outstanding or the N.J. Economic Development Authority – School Facilities Construction (Baa1/BBB+/A-) with about $10B outstanding,” Janney said. “The state, which has not issued GO debt since 2016, has about $1.8 billion of GO bonds outstanding.”

Topping the competitive slate next week will be the New York Metropolitan Transportation Authority, which is coming to market with around $2.4 billion of deals composed of about $940 million of green revenue bonds selling on Thursday and $1.5 billion of bond anticipation notes selling on Monday.

Public Resources Advisory Group and Rockfleet Financial are the financial advisors. Nixon Peabody and D. Seaton & Associates are the bond counsel.

Since 2010, the MTA has sold about $38.8 billion of debt, with the most issuance occurring in 2012 when it issued $6.7 billion. It sold the least amount in 2011, when it offered $1.6 billion.
The New York Transitional Finance Authority is also heading to market with a competitive sale of about $109 million of Fiscal 2020 NYC recovery bonds on Tuesday.

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

Secondary market
Munis were weaker on the MBIS benchmark scale, with yields rising by less than one basis point in the 10-year maturity and by one basis point in the 30-year maturity. High-grades were mixed, with yields on MBIS AAA scale falling less than one basis point in the 10-year maturity and rising by one basis point in the 30-year maturity.

On Refinitiv Municipal Market Data’s AAA benchmark scale, the yield on the 10-year GO remained steady at 1.44% while the 30-year was unchanged at 2.09%.

The 10-year muni-to-Treasury ratio was calculated at 75.4% while the 30-year muni-to-Treasury ratio stood at 87.9%, according to MMD.

Stocks were mostly lower as Treasuries weakened.

The Dow Jones Industrial Average was down about 0.19%, the S&P 500 Index lost around 0.11% and the Nasdaq was up about 0.02%.

The Treasury three-month was yielding 1.556%, the two-year was yielding 1.569%, the five-year was yielding 1.691%, the 10-year was yielding 1.911% and the 30-year was yielding 2.385%.
Previous session's activity
The MSRB reported 21,616 trades Monday on volume of $5.52 billion. The 30-day average trade summary showed on a par amount basis of $11.12 million that customers bought $5.94 million, customers sold $3.30 million and interdealer trades totaled $1.89 million.

New York, California and Texas were most traded, with the Empire State taking 15.215% of the market, the Golden State taking 13.956% and the Lone Star State taking 10.307%.

The most actively traded security was the California GO taxable 2.375s of 2026, which traded 14 times on volume of $20.28 million.

NYC Bond History: Bonds for recruits in Civil War
New York City Comptroller Scott Stringer’s Office on Tuesday related the story of the bonds for bodies — money paid to recruits to join the Union Army and fight for the North during the war between the states.

“New York City’s payment of recruitment bounties during the Civil War was particularly high compared to other states and localities. Having witnessed the draft riots of 1863, the city paid large sums to volunteers in an attempt to avoid a repeat,” the Comptroller’s Office said.

“A county board of supervisors, a duplicative and overlapping entity created for greater state control of New York City, issued debt to repair property damaged in the draft riots. The county supervisors then began paying $300 to volunteers, funded by bonds, with some soldiers receiving payment from the city as well. A quarter of all New York City soldiers received a recruitment bounty from either the city or county over the course of the Civil War,” the Comptroller’s Office said.
New York City and New York County debt related to the Civil War peaked at about $14.5 million and bonds were sold at par with 6% coupons. The bonds had maturities of up to 30 years and were payable from tax revenues in a level debt structure of equal annual installments.

This information was taken from the book The Finances of New York City published in 1898, by Edward Dana Durand.

Christine Albano contributed to this report.

Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation.

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