The municipal bond market is set to see the first of the week's new issues hit the screens on Tuesday ahead of the Federal Reserve meeting on monetary policy.
The Federal Open Market Committee meets on Tuesday and Wednesday. Having raised the target range for the federal funds rate to 1/2 to 3/4 percent at its last meeting, the FOMC is expected to take no action on rates at this meeting, despite the expectation the panel will raise the target three times this year.
Secondary Market
U.S. Treasuries were mostly lower on Tuesday. The yield on the two-year Treasury held at 1.21% from 1.21% on Monday, while the 10-year Treasury yield grew to 2.49% from 2.48%, and the yield on the 30-year Treasury bond rose to 3.09% from 3.08%.
Top-quality municipal bonds finished unchanged on Monday. The 10-year benchmark muni general obligation yield was flat from 2.33% on Friday, while the yield on the 30-year GO was unchanged from 3.08%, according to the final read of Municipal Market Data's triple-A scale.
On Monday, the 10-year muni to Treasury ratio was calculated at 93.8% compared to 94.0% on Friday, while the 30-year muni to Treasury ratio stood at 100.0%, versus 100.7%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 40,006 trades on Monday on volume of $8.08 billion.
Primary Market
This week's new issue slate is estimated at $4.03 billion, comprised of $3.37 billion of negotiated deals and $661.4 million of competitive sales.
On Monday, Barclays Capital priced the New York City Municipal Water Finance Authority's $330 million of Fiscal 2017 Series DD water and sewer system second general resolution revenue bonds for retail investors ahead of the institutional pricing on Tuesday.
The deal was offered as a four-way split 2047 maturity and priced for retail as 4 3/4s to yield 3.88%, as 4s to yield 3.83% and as 5s to yield 3.48%; the fourth section was not offered to retail investors.
The bonds are rated Aa1 by Moody's Investors Service and AA-plus by S&P Global Ratings and Fitch Ratings.
The biggest deal of the week is coming out of Oklahoma, with Wells Fargo Securities expected to price the Oklahoma Turnpike Authority's $478.51 million of Series 2017A second senior revenue bonds and Series 2017B refunding second senior revenue bonds for retail investors on Tuesday, ahead of the institutional pricing on Wednesday.
The deal is rated Aa3 by Moody's and AA-minus by S&P and Fitch.
Piper Jaffray is expected to price the North Clackamas School District No. 12, Ore.'s $323.64 million Series 2017 general obligation bonds and Series 2017A GOs on Tuesday.
The deal is rated Aa1 by Moody's and AA-minus by S&P.
Citigroup is set to price the University of Colorado Hospital Authority's $300 million of Series 2017C-1 and Series 2017C-2 revenue put bonds. The deal is rated Aa3 by Moody's and AA-minus by S&P and Fitch.
Goldman Sachs is expected to price the D.C Water and Sewer Authority's $300 million of Series 2017A public utility senior lien revenue green bonds and Series 2017B public utility senior lien revenue bonds on Tuesday. The deal is rated Aa1 by Moody's and triple-A by S&P.
In the competitive arena on Tuesday, the University System of Maryland is selling $115 million of Series 2017A tax-exempt auxiliary facility and tuition revenue bonds. The system is also competitively selling $52.26 million of Series 2017B tax-exempt auxiliary facility and tuition refunding revenue bonds.
Both deals are rated Aa1 by Moody's and AA-plus by S&P and Fitch.
Since 2007, the system has issued about $1.67 billion of debt, with the largest issuance occurring in 2010 when it sold roughly $286 million of debt. The system did not come to market at all in 2013. With Tuesday's sales, it is only about $35 million away from equaling last year's total and has already beat the yearly issuances of 2015 and 2014.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $483.9 million to $9.09 billion on Tuesday. The total is comprised of $1.92 billion of competitive sales and $7.17 billion of negotiated deals.
