For the second consecutive week the largest scheduled deal has been pulled from the calendar.
JP Morgan confirmed to The Bond Buyer the $1.2 billion taxable deal from the Florida State Board of Administration scheduled for Thursday has been moved to next week.
The municipal bond market still has an eye on the Chicago Public Schools issue, which was postponed last week.
No reason was given for the Florida delay. An exact day next week has also yet to be determined, according to the underwriter. This will bring down this week's volume, which was estimated at just $5.37 billion.
Last week the Chicago Public Schools postponed its $875 million general obligation bond deal. Chicago Board of Education officials placed the offering on the day-to-day negotiated calendar. But CPS Chief Executive Officer Forrest Claypool said last Thursday the board expects to bring the sale to market early this week.
While CPS has been battered by negative headlines over rating downgrades and a Republican-led effort pushing for state oversight and possible bankruptcy, the district got some positive news that contract talks with the Chicago Teachers Union had broken through a logjam.
Wednesday's postponement decision came as the market awaited the deal following the Tuesday release of a pre-marketing pricing scale that offered rich yield premiums, with spreads of more than 500 basis points from the Municipal Market Data's benchmark. That was 200 basis points higher than the district's sale in April.
Primary Market
The action got started right away as King County, Wash., sold $279.08 million of Series 2016A sewer refunding revenue bonds, with Bank of America Merrill Lynch winning the bid with a true interest cost of 3.27%. The bonds were priced to yield from 0.40% with a 3% coupon in 2016 to 3.22% with a 4% coupon in 2041.The deal is rated Aa2 by Moody's Investors Service and AA-plus by Standard & Poor's.
The county last competitively sold comparable bonds on Oct. 26, 2015, when Bank of America Merrill Lynch won $93.35 million of Series 2015B sewer improvement and refunding revenue bonds with a true interest cost of 3.36%.
On Tuesday Nassau County, N.Y., will competitively sell $120.14 million of Series 2016B general improvement bonds. The issue is rated A2 by Moody's, A-plus by S&P and A by Fitch. The county last competitively sold comparable bonds on May 20, 2015, when JPMorgan won $168.90 million of Series 2015B general improvement bonds with a TIC of 3.78%.
Piper Jaffray is expected to price San Antonio, Texas' $215.39 million of water system junior lien revenue refunding bonds consisting of Series 2016A and Series 2016B taxable bonds on Tuesday. The deal is rated Aa2 by Moody's and AA by S&P.
Secondary Market
Municipal bonds were mostly steady, although as much as one basis point higher on some maturities, according to traders.
The yield on the 10-year benchmark muni general obligation was as much as one basis point higher from 1.71% on Friday, while the 30-year muni yield was steady from 2.75%, according to a read of Municipal Market Data's triple-A scale.
Treasuries were weaker at midday on Monday. The yield on the two-year Treasury rose to 0.80% from 0.77% on Friday, while the 10-year Treasury yield increased to 1.95% from 1.93% and the 30-year Treasury bond yield was higher to 2.76% from 2.75%.
The 10-year muni to Treasury ratio was calculated on Friday at 88.7% compared to 88.2% on Thursday, while the 30-year muni to Treasury ratio stood at 99.8% versus 99.3%, according to MMD.
Last Week's Most Active Sectors
Revenue bonds comprised 52.95% of new issuance in the week ended Jan. 29, down from 54.02% in the previous week, according to Markit. General obligation bonds comprised 39.01% of total issuance, up from 38.31%, while taxable bonds made up 8.04%, up from 7.67%.
Some of the most actively traded issues were in Virginia, New York and California. In the GO bond sector, the Fairfax County, Va., 4s of 2026 were traded 19 times. In the revenue bond sector, the Triborough Bridge and Tunnel Authority 3s of 2035 were traded 59 times. And in the taxable bond sector, the California state 7.6s of 2040 traded 23 times, Markit said.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $980.4 million to $9.59 billion on Monday. The total is comprised of $3.33 billion of competitive sales and $6.26 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 34,288 trades on Friday on volume of $8.297 billion.
Yvette Shields contributed to this report
