Market participants sense a stronger tone in the municipal bond market on Tuesday despite limited activity.
"The Treasury market is not doing all that much and munis are just sitting there," a New York trader said. "The MMD scale has adjusted downward in the past week."
Munis were steady across the curve on Tuesday, according to the Municipal Market Data's triple-A scale.
Treasuries were mixed Tuesday, with the 30-year yield inching up one basis point to 3.25% and the two-year note falling three basis points to 0.44%. The 10-year benchmark was unchanged at 2.44% from Monday's market close.
Issuance is expected to increase 24% this week to $6.67 billion from $5.37 billion that Thomson Reuters reported came to market last week.
"The new issue calendar is bigger this week and I don't suspect there will be a problem getting the deals done," the New York trader said.
The Alabama University Board of Trustees sold a two-part deal totaling $243.9 million of revenue bonds in the competitive market on Tuesday.
Bank of America won the bid for the $215.3 million portion. Yields ranged from 2.00% with a 5% coupon in 2022 to 3.81% with a 4% coupon in 2044. The bonds are callable at par in 2024.
TD Securities was awarded the $28.6 million part of the deal. The entire deal is rated Aa2 by Moody's Investors Service and AA-minus by Standard and Poor's.
The state of Minnesota is in the process of selling its five-part deal totaling $904 million of general obligation bonds in the competitive market on Tuesday.
Bank of America has won the bid for the $438.1 million, the $288 million and the $123 million portions and with TICs of 2.8276%, 2.7098% and 2.00%, respectively.
"The deal is coming at great levels and tight aggressive spreads," a trader in Minnesota said. "We're still waiting on the taxable portion to come as well as the unique part of the deal that has the lower coupon. The larger pieces have done well."
The deal is rated Aa1 by Moody's and AA-plus by both S&P and Fitch Ratings.
The city of New York's $900 million of tax-exempt fixed-rate GO refunding bonds, the largest deal in the negotiated market this week, entered the second day of its retail order period.
"Retail got about [$]159 [million] done yesterday," a second trader in New York said. "Maturities didn't sell out so there are plenty left over. They did increase the yields by two basis points in some of the maturities. It's priced fairly for a large deal."
Yields on the $706.7 million portion ranged from 1.00% with a 5% coupon in 2018 to 3.41% with a 5% coupon in 2034. There are sealed bids in 2016 and 2017.
"New York's rating is high relative to a number of years ago," a third New York trader said. "New York bonds have traded well compared to 10 to 15 years ago. The spreads are tight. Looking for a real bargain? You won't find it in New York City. I speculate that it will go reasonably well unless people start to step back because yields have lowered."
Yields on the $193.3 million part ranged from 1.00% with a 3% coupon in 2018 to 3.65% with a 3.50% coupon in 2034. There are sealed bids in 2015, 2016 and 2017.
All of the bonds are callable at par in 2024 and are rated Aa2 by Moody's and AA by both S&P and Fitch.
JPMorgan is expected to price $166.1 million Idaho Health Facilities Authority revenue bonds. The deal is rated A3 by Moody's and A-minus by S&P.
