Prices of top-quality municipal bonds are mostly unchanged at mid-session, traders say, as another snowstorm limits trading activity.
Meanwhile, the market is waiting on this week's new issue slate, which tops out at almost $9 billion.
Secondary Market
Yields on top-rated tax-exempt bonds were little changed at midday. The yield on the muni 10-year benchmark general obligation was steady from 1.72% on Friday, while the yield on 30-year GOs was unchanged from 2.50%, according to a read of Municipal Market Data's triple-A scale.
At the close on Friday, the 10-year muni yield was 25 basis points higher than its all-time low of 1.47% hit in 2012, while the 30-year yield was only three basis points above its all-time low of 2.47%, also set in 2012.
On Monday, Treasury prices were mixed. The two-year note yield decreased to 0.46% from 0.48% on Friday; the 10-year yield was unchanged at 1.68% from 1.68%, while the 30-year yield increased to 2.27% from 2.26%.
Meanwhile, the muni to Treasury ratio has been making tax-exempts look attractive.
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.
On Friday, the 10-year muni to Treasury ratio increased to 103.0% from 99.4% on Thursday, while the 30-year muni to Treasury ratio rose to 111.6% from 109.0%.
MSRB Reports Previous Session's Activity
The Municipal Securities Rulemaking Board reported 36,457 trades on Friday on volume of $11.245 billion.
Most active on Friday, based on the number of trades, was the Tulare Local Health Care District, Calif., taxable Build America Bonds of 2009 7.95s of 2035, which traded 117 times with an average price of 108.226 and an average yield of 5.841%.
Primary Market
Volume for this week is estimated at $8.834 billion, according to Ipreo and The Bond Buyer, This is up from a revised total of $4.108 billion last week, according to Thomson Reuters.
About $6.079 billion negotiated deals are scheduled for the week while competitive sales are expected to total around $2.756 billion.
In the competitive arena, Pennsylvania's $1 billion unlimited tax general obligation bonds headline the new issue slate and will go up for bidding on Tuesday. The issue is structured as serials ranging from 2016 to 2035. The bonds are rated Aa3 by Moody's Investors Service and AA-minus by both Standard & Poor's and Fitch Ratings.
Also on the competitive slate is the Virginia Public School Authority's $459 million of school financing refunding bonds. The issue is set for sale on Tuesday and rated Aa1 by Moody's and AA-plus by S&P and Fitch.
And the state of Wisconsin will be selling $279.375 million of unlimited tax general obligation bonds. The issue will go up for bid on Tuesday.
Topping the negotiated calendar is a $955 million composite deal from the Trinity Health Credit Group. The bonds will be priced on Tuesday by Bank of America Merrill Lynch in three series one each from Michigan, Idaho and Maryland. The issue is rated Aa3 by Moody's, AA-minus by S&P and AA by Fitch.
Mississippi will bring a four-part sale of GOs totaling $702 million. The $157 million Series A GOs is set to be priced by Raymond James on Tuesday; the $129 million Series B taxable GOs is expected to be priced by Bank of America Merrill on Tuesday; the $247 million Series C GO refunding bonds totaling is slated to be priced by JPMorgan Securities on Thursday; and the $169 million Series D taxable GO refunding bonds will be priced by RBC Capital Markets on Tuesday. All series are rated Aa2 by Moody's, AA by Standard & Poor's, and AA-plus by Fitch.
Also on tap is the $499 million Los Angeles Department of the Airports, Calif., offering. Morgan Stanley is expected to price the issue in three series: senior revenue bonds, Series A (AMT); senior revenue bonds Series B (non-AMT); and subordinate refunding revenue bonds, Series C. The senior bonds are rated Aa3 by Moody's and AA by S&P and Fitch, while the subordinate bonds are rated A1 by Moody's and AA-minus by Standard & Poor's and Fitch.
