Municipal market participants are set for a second straight week of issuance greater than $8 billion amid a surge in demand.

Ipreo estimates volume will hold steady at $8.8 billion, after a revised total of $8.9 billion sold in the past week, according to updated figures from Thomson Reuters. The calendar for the week ahead is composed of $7.17 billion of negotiated deals and $1.62 billion of competitive sales.

The calendar will feature one billion dollar deal, along with 15 other deals that are scheduled to be greater than $100 million in par amount.

“We saw even more demand than usual in the past week and retail had a lot to do with that,” said Dawn Mangerson, managing director and senior portfolio manager at McDonnell Investment Management. “I also think that people are starting to see that tax reform might not be as bad as they anticipated, if it happens at all, so investors are feeling relieved.”

Morgan Stanley is scheduled to price the week’s largest issue, Los Angeles Unified School District’s $1.08 billion of general obligation refunding and dedicated unlimited ad valorem property tax bonds, on Tuesday. The deal is rated Aa2 by Moody’s Investors Service and triple-A by Fitch Ratings.

Wells Fargo plans to price the Dormitory Authority of the State of New York’s $665 million of revenue tax exempt bonds and taxable bonds for New York University on Tuesday following indications of interest on Monday. The Series A tax-exempt bonds are expected to mature serially from 2019 through 2038 and include a term bond in 2043, while the Series B taxable bonds are expected to mature serially from 2019 through 2032 and include terms in 2039 and 2047. The deal is rated Aa2 by Moody’s and AA-minus by S&P Global Ratings.

Siebert Cisneros Shank & Co., is slated to run the books on the District of Columbia’s $576.415 million of GO refunding bonds on Wednesday. The deal is expected to mature serially from 2019 through 2037 and is rated Aa1 by Moody’s and AA by S&P and Fitch.

The largest competitive sale will come from the city of Phoenix Civic Improvement Corp., when it auctions off $215.87 million of subordinate excise tax revenue and refunding bonds on Tuesday.

“The need for income, the reach for yield continues, as well as spreads grinding tighter,” said Jim Grabovac, senior portfolio manager at McDonnell. “The muni curve is pressured steeper and volatility is so low and getting lower.”

Secondary market
Municipal bonds finished stronger on Friday. The yield on the 10-year benchmark muni general obligation fell five basis points to 2.11% from 2.16% on Thursday, while the 30-year GO yield declined three basis points to 2.98% from 3.01%, according to the final read of Municipal Market Data's triple-A scale.

U.S. Treasuries were stronger on Friday. The yield on the two-year Treasury dropped to 1.29% from 1.34% on Thursday, while the 10-year Treasury yield declined to 2.33% from 2.40%, and the yield on the 30-year Treasury bond decreased to 2.99% from 3.04%.

The 10-year muni to Treasury ratio was calculated at 90.6% on Friday, compared with 90.1% on Thursday, while the 30-year muni to Treasury ratio stood at 99.6%, versus 99.1%, according to MMD.

Week's actively traded issues
Some of the most actively traded issues by type in the week ended May 12 were from California and Ohio, according to Markit.

In the GO bond sector, the San Francisco Bay Area Rapid Transit District, Calif., 5s of 2047 were traded 20 times. In the revenue bond sector, the Cuyahoga County, Ohio, 5.5s of 2057 were traded 61 times. And in the taxable bond sector, the University of California 3.063s of 2025 were traded 43 times.

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

On the bid side, the Puerto Rico Aqueduct and Sewer Authority revenue 5.25s of 2042 were quoted by 215 unique dealers. On the ask side, New Jersey Turnpike Authority 4s of 2035 were quoted by 155 unique dealers. And among two-sided quotes, the Puerto Rico Commonwealth 5s of 2041 were quoted by 27 unique dealers.

Lipper: Muni bond funds see inflows
Investors in municipal bond funds continued to put cash back into the funds in the latest week, according to Lipper data released late on Thursday.

The weekly reporters saw $605.731 million of inflows in the week ended May 10, after inflows of $127.783 million in the previous week.

The four-week moving average was still in the green at positive $292.065 million, after being positive at $547.560 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 also had inflows, gaining $355.772 million in the latest week after rising $21.355 million in the previous week. Intermediate-term funds had inflows of $104.229 million after outflows of $20.400 million in the prior week.

National funds had inflows of $635.1164 million after inflows of $205.904 million in the previous week. High-yield muni funds reported inflows of $179.829 million in the latest reporting week, after inflows of $36.671 million the previous week.

Exchange traded funds saw inflows of $30.237 million, after outflows of $21.160 million in the previous week.

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