The municipal bond market will be lighter than usual again in the holiday shortened week, though tax-exempt issuance will make a comeback at the top of the slate, after taxable issuance dominated the past week.

Ipreo estimates volume will nudge up to $3.35 billion from the revised total of $3.12 billion sold in the past week, according to updated figures from Thomson Reuters. The calendar for the week ahead is composed of $2.36 billion of negotiated deals and $986 million in competitive sales.

The sales will be bunched up into a two-day period on Wednesday and Thursday, with the market closed for Martin Luther King Jr. day on Monday.

"We have a relatively light calendar coming up, but coming off good bond fund inflows, people will likely be fighting for bonds in the marketplace," said Tom Weyl, director of municipal research at Wasmer, Schroeder & Company. Weyl, a new addition to the WSC team, is back on the buy side where he started his career, after heading the new business team at National Public Finance Guarantee. The unit of MBIA Inc. stopped insuring new municipal bonds in July of last year.

Goldman Sachs is scheduled to run the books on the largest deal of the week –Chicago's Sales Tax Securitization Corp.’s $898.07 million. The deal is expected to price on Wednesday and is rated AA by S&P Global Ratings, AAA by Fitch Ratings and Kroll Bond Rating Agency.

"A structure like this needs to trade cheaper than the ratings," Weyl said. "It works when things are going well but on a downturn, the whole rational behind it gets thrown out the window. We are taking a cautious approach and aren't treating it like a AAA credit."

A New York trader added that when the Chicago sales tax bonds issued their inaugural sale, it was during the great tax reform rush of 2017 – where a lot of deals got done just due to the environment.

“This should be a better test of what the market thinks of this new credit,” he said.

Stifel is scheduled to price the Denver Public School’s $211.995 million of GO bonds, consisting of both tax-exempt and taxable bonds on Thursday. The deal is rated Aa2 by Moody’s Investors Service and AA-plus by S&P and Fitch.

In the competitive arena, The University of Kentucky is scheduled to sell a total of $220.685 million of taxable and tax-exempt general receipt bonds on Wednesday. The deals are rated Aa2 by Moody’s and AA by S&P.

Secondary market
The MBIS municipal non-callable 5% GO benchmark scale was mixed in late trading.

The 10-year muni benchmark yield rose to 2.374% on Friday from the final read of 2.363% on Thursday, according to Municipal Bond Information Services. The MBIS 30-year benchmark muni yield fell to 2.850% from 2.858%.

The MBIS benchmark index is updated hourly on the Bond Buyer Data Workstation.

Top-rated municipal bonds finished unchanged on Friday. The yield on the 10-year benchmark muni general obligation was steady from 2.12% on Thursday, while the 30-year GO yield was flat from 2.71%, according to a read of MMD’s triple-A scale.

U.S. Treasuries were mixed in late activity. The yield on the two-year Treasury rose to 2.00% from 1.96% on Thursday, the 10-year Treasury yield gained to 2.55% from 2.53% and the yield on the 30-year Treasury decreased to 2.85% from 2.87%.

On Friday, the 10-year muni-to-Treasury ratio was calculated at 83.2% compared with 83.8% on Thursday, while the 30-year muni-to-Treasury ratio stood at 95.0% versus 94.6%, according to MMD.

Week's actively traded issues
Some of the most actively traded bonds by type in the week ended Jan. 12 were from California, New jersey and Pennsylvania issuers, according to Markit.

In the GO bond sector, the Santa Clara Unified School District., Calif., 3s of 2036 traded 24 times. In the revenue bond sector, the New Jersey Economic Development Authority 4s of 2047 traded 47 times. And in the taxable bond sector, the Pennsylvania Commonwealth Financing Authority 3.864s of 2038 traded 71 times.

Week's actively quoted issues
New Jersey and Illinois names were among the most actively quoted bonds in the week ended Jan. 12, according to Markit.

On the bid side, New Jersey Turnpike Authority 4s of 2043 were quoted by 45 unique dealers. On the ask side, the N.J. Turnpike 4s of 2043 were quoted by 207 dealers. And among two-sided quotes, Illinois taxable 6.63s of 2035 were quoted by 21 unique dealers.

Lipper: Muni bond funds saw outflows
Investors in municipal bond funds turned around and put cash back into the funds in the latest week, according to Lipper data released on Thursday.

The weekly reporters saw $1.06 billion of inflows in the week of Jan. 10, after outflows of $47.880 million in the previous week.

Exchange traded funds reported inflows of $22.703 million, after inflows of $195.493 million in the previous week. Ex-ETFs, muni funds saw $1.04 billion of inflows, after outflows of $243.373 million in the previous week.

The four-week moving average was positive at $271.840 million, after being positive $59.882 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 $1.12 billion in the latest week after inflows of $255.775 million in the previous week. Intermediate-term funds had inflows of $360.123 million after inflows of $8.637 million in the prior week.

National funds had inflows of $988.826 million after inflows of $138.051 million in the previous week.

High-yield muni funds reported inflows of $365.937 million in the latest week, after inflows of $73.675 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.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.