Activity in the municipal bond primary sector will get underway on Tuesday as several large deals kick off the action, with offerings from Wisconsin and Kentucky on tap. Traders will be keeping an eagle eye on yields, which have been rising in recent sessions.
U.S. Treasuries were narrowly mixed on Tuesday. The yield on the two-year Treasury dipped to 1.27% from 1.28% on Monday, while the 10-year Treasury yield was unchanged from 2.32%, and the yield on the 30-year Treasury bond decreased to 3.00% from 3.01%.
Top-rated municipal bonds ended weaker on Monday. The yield on the 10-year benchmark muni general obligation rose four basis points to 2.18% from 2.14% on Friday, while the 30-year GO yield increased three basis points to 3.05% from 3.02%, 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 with 93.9% on Friday, while the 30-year muni to Treasury ratio stood at 101.3%, versus 102.3%, according to MMD.
MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 37,419 trades on Monday on volume of $8.75 billion.
This week’s new issue calendar totals $7.02 billion and consists of $5.96 billion of negotiated deals and $1.06 billion of competitive sales. Action gets underway on Tuesday with the pricing of several large deals.
The state of Wisconsin will be coming to market with $688.31 million of tax-exempt and taxable bonds in two separate sales on Tuesday.
Wells Fargo Securities is set to price the state’s $403.11 million of Series 2017C general fund annual appropriation refunding taxable bonds.
The deal is rated Aa3 by Moody’s Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.
And JPMorgan Securities is set to price the state’s $285.21 million of Series 2017-1 transportation revenue bonds on Tuesday.
This deal is rated Aa2 by Moody’s, AA-plus by S&P and Fitch and triple-A by Kroll Bond Rating Agency.
Bank of America Merrill Lynch is slated to price the Kentucky Economic Development Finance Authority’s $495 million of Series 2017 A and B hospital revenue refunding bonds for Owensboro Health on Tuesday.
The deal is rated Baa3 by Moody’s and BBB by Fitch.
Since 2007, the Kentucky EDFA has issued roughly $3.51 billion of securities, with the most issuance occurring in 2009 when it sold roughly $769 million. The authority did not come to market at all in 2014 and has issued less than $100 million three other years during that time period.
Raymond James is expected to price the Richardson Independent School District, Texas’ $207.43 million of unlimited tax school building bonds on Tuesday.
The deal, backed by the Permanent School Fund guarantee program, is rated triple-A by Moody’s and S&P.
Bond Buyer visible supply
The Bond Buyer's 30-day visible supply calendar increased $177 million to $13.17 billion on Tuesday. The total is comprised of $3.84 billion of competitive sales and $9.33 billion of negotiated deals.