Municipal bond traders are set to see two big deals hit the screens on Tuesday, as the hefty California sale and the large New York City Transitional Financing Authority offering will be priced for institutions.
Secondary Market
U.S. Treasuries were slightly weaker on Tuesday. The yield on the two-year Treasury rose to 1.31% from 1.30% on Monday, while the 10-year Treasury yield gained to 2.50% from 2.49%, and the yield on the 30-year Treasury bond increased to 3.11% from 3.10%.
Top-rated municipal bonds were mostly steady on Monday. The 10-year benchmark muni general obligation yield increased one basis point to 2.42% on Monday from 2.41% on Friday, while the yield on the 30-year GO was unchanged at 3.18%, according to a final read of Municipal Market Data's triple-A scale.
On Monday, the 10-year muni to Treasury ratio was calculated at 97.1% compared to 96.9% on Friday, while the 30-year muni to Treasury ratio stood at 102.7%, versus 103.2%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 37,720 trades on Monday on volume of $8.17 billion.
Primary Market
This week's calendar is composed of $7.69 billion of negotiated deals and $2.54 billion of competitive sales.
The state of California is scheduled to hit the market with the largest bond deal of 2017 to date when it sells $2.45 billion of various purpose general obligation bonds for institutions on Tuesday. Some market sources said if the deal sees good retail demand, it could be upsized – perhaps to as much as $3.5 billion. The deal was priced for retail on Monday.
The $519.3 million of various purpose GO bonds were priced for retail to yield 1.41% with a 5% coupon in 2020 to 2.40% with a 5% coupon in 2024. A term bond in 2046 was priced in a split maturity to yield 3.97% with a 4% coupon and 3.52% with a 5% coupon. The 2017 maturity was offered as a sealed bid.
The $1.93 billion of various purpose GO refunding bonds were priced for retail to yield from 1.18% with a 3% coupon, a 4% coupon and a 5% in a triple split maturity in 2019 to 3.89% with a 4% coupon and 3.47% with a 5% coupon in a split 2038 maturity. No retail orders were taken in the third split of the 2020 maturity, the second split of the 2022 maturity, the 2023 maturity or the second split of the 2024 maturity. The 2018 maturity was offered as a sealed bid.
The deal is rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.
Since 2007, the Golden State has sold about $97.24 billion of bonds, with the most issuance coming in 2009 when it offered $23.18 billion. The state has issued more than $6 billion every year except for 2011 and 2012 in that period. Last year California was the biggest municipal bond issuer in the country.
JPMorgan Securities is set to price the New York City Transitional Finance Authority's $800 million of future tax secured subordinate refunding bonds for institutions after holding a two-day retail order period.
On Monday, the TFA's $761.725 million of Fiscal 2017 Series C future tax secured tax-exempt subordinated bonds were priced for retail to yield from 1.23% with 4% and 5% coupons in a split 2019 maturity to 3.64% with a 3.50% coupon and 3.59% with a 4% coupon in a split 2034 maturity. A 2018 maturity was offered as a sealed bid; no retail orders were taken in the 2030-2032 maturities. The TFA's $38.275 million of Fiscal 2017 Series D future tax secured tax-exempt subordinated bonds were priced for retail to yield from 1.23% with a 3% coupon in 2019 to 3.64% with a 3.50% coupon in 2034. The 2017 and 2018 maturities were offered as sealed bids.
On Friday, the TFA's $761.73 million of Fiscal 2017 Series C future tax secured tax-exempt subordinated bonds were priced for retail to yield from 1.19% with 4% and 5% coupons in a split 2019 maturity to 3.59% with a 3.50% coupon and 3.54% with a 4% coupon in a split 2034 maturity. A 2018 maturity was offered as a sealed bid; no retail orders were taken in the 2030-2032 maturities. The TFA's $38.28 million of Fiscal 2017 Series D future tax secured tax-exempt subordinated bonds were priced for retail to yield from 1.19% with a 3% coupon in 2019 to 3.59% with a 3.50% coupon in 2034. The 2017 and 2018 maturities were offered as sealed bids.
The deal is rated Aa1 by Moody's and triple-A by S&P and Fitch.
Goldman Sachs is expected to price the New Jersey Educational Facilities Authority's $338.44 million of revenue refunding bonds for Princeton University on Tuesday. The deal is rated triple-A by Moody's and S&P.
In the competitive arena on Tuesday, Wisconsin will sell $340.39 million of Series 2017 unlimited tax GOs.
Boston will sell competitively $150 million of Series 2017A unlimited tax GOs on Tuesday. The deal is rated triple-A by Moody's and S&P.
Sullivan County, Tenn., is competitively selling $140 million of Series 2017 GOs on Tuesday. The deal is rated Aa2 by Moody's.
The Springdale School District No. 50, Ark., will competitively sell $128.8 million of limited tax GO refunding bonds on Tuesday. The deal is rated Aa2 by Moody's.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $725.73 million to $15.57 billion on Tuesday. The total is comprised of $4.85 billion of competitive sales and $10.73 billion of negotiated deals.
