Municipal bond traders are ready for the first of the week's big new issues to come to market today.
Muni volume for the week is estimated at $7.824 billion, according to Ipreo and The Bond Buyer. Negotiated deals total $5.910 billion while competitive sales total $1.915 billion.
Primary Market
Some of the big deals scheduled for the week include Washington state's four separate competitive sales totaling more than $1 billion, set for bidding today.
Also today, Morgan Stanley is expected to price the Alabama Federal Aid Highway Finance Authority's $508 million special obligation revenue bonds.
The largest deal of the week will come on Thursday — a $1.75 billion offering from the Texas Transportation Commission for the Central Texas Turnpike System, consisting of first- and second-tier revenue refunding bonds to be priced by Barclays Capital.
Also slated for Thursday is the $460 million Louisiana gas and fuels revenue bonds to be priced by Citigroup Global Markets and the $442 million East Bay Municipal Utility District, Calif., water revenue bonds to be priced by J.P. Morgan Securities.
Secondary Market
On Wednesday, Treasury prices were mixed, with the two-year note yield up to 0.50% from 0.49% on Tuesday. The 10-year yield was down to 1.78% from 1.80%, while the 30-year yield dropped to 2.36% from 2.40%.
On Tuesday, the yield on the 10-year benchmark general obligation was one basis point higher at 1.76% from 1.75% on Friday, while the yield on 30-year GOs was unchanged at 2.54%, according to a final read of MMD's triple-A benchmark scale.
The 10-year muni to Treasury ratio stood at 97.7% on Tuesday compared to 96.7% on Friday, while the 30-year muni to Treasury ratio was at 106.1% versus 104.5%. The ratio is calculated by taking the yield on a triple-A rated muni and comparing it to the yield on a Treasury of a similar maturity. The higher the ratio, the more attractive tax-exempts are to Treasuries. When used in combination with other measures, it can be a valuable tool for investors and fund managers in gauging the relative value of munis to other investments.
MSRB Reports Previous Session's Activity
The Municipal Securities Rulemaking Board reported 34,526 trades on Tuesday on volume of $6.110 billion. Most active on Tuesday, based on the number of trades, was the New Jersey Transportation Trust Fund Authority transportation program bonds, Series AA 4 1/4s of 2044, which traded 78 times with an average price of 103.939 and an average yield of 3.748%.
