Muni weekly volume a`light' $4.8B as issuers place fewer CUSIP requests

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Municipal bond buyers will be looking to a variety of bonds slated to hit the screens in the new week. Market sources say the calendar looks promising for investors, even as a report on CUSIP requests cast doubt on prospects for near-term supply pickup.

Ipreo estimates the weekly volume at $4.76 billion, comprised of $3.12 billion of negotiated deals and $1.64 billion of competitive sales. Average weekly volume in 2017 was $6 billion.
Baltimore County, Md., tops the slate as it will issue about $837 million of bonds and notes in four separate competitive offerings.

On Wednesday, the county will sell $225 million of general obligation metropolitan district bonds, 80th issue, and $121 million of 2018 GO consolidated public improvement bonds. On Thursday, the county will sell $246 million of Series 2018 consolidated public improvement general obligation bond anticipation notes and $245 million of Series 2018 metropolitan district general bond anticipation notes.

In the negotiated sector, Goldman Sachs will price Alabama’s Black Belt Energy Gas District’s $653 million of gas prepay revenue bonds for Project No. 3.

Also on tap, RBC Capital Markets will price the New York State Thruway Authority’s $600 million of Series L general revenue refunding bonds.

And two airports deals will be hitting the screens.

Bank of America Merrill Lynch is set to price Houston, Texas’ $417 million of airport system subordinate lien revenue and refunding bonds consisting of Series 2918A bonds subject to the alternative minimum tax and Series 2018B non-AMT bonds.

Barclays Capital is set to price the Los Angeles Department of Airports $376 million of Series 2018 AMT subordinate revenue bonds for Los Angeles International Airport.

The airport deals will be well received, according to Alan Schankel, managing director of research at Janney Capital Markets.

“Lower fuel prices in the past three years along with more stability of airlines post American-US Air merger have supported solid enplanement growth across larger airports,” he said. “LAX in particular benefits from recently robust passenger growth (~7% annual) and low exposure to a single airline.”

With the large airport deals and an energy deal on tap, a New York trader said he didn’t expect a lot of retail demand.

“I think retail might hang back because airport deals usually have premium bonds that retail shies away from,” he said.

Overall he said “the calendar is light and deals should do well.”

He said February trading activity was a welcome boost from the start of the year. “It seems like there’s a little better tone than January with rates rising,” he said.

CUSIP requests plunge 57% in Jan.
CUSIP requests for municipal issues droppped by more than half last month, falling 57% to 732 in January from 1,683 in December, CUSIP Global Services said on Thursday. The report tracks requests by issuers for bond identifiers as an early indicator of new volume.

On a year-over-year basis, muni CUSIP request volume was down 26% versus January 2017.

“We’re still seeing fallout from the Tax Cuts and Jobs Act in our muni request volumes,” said Gerard Faulkner, Director of Operations for CUSIP Global Services. “While lawmakers are currently reviewing a new bill that would restore the tax exemption for advance refunding bonds, for now, the marketplace is reacting to the tax reform by dramatically curtailing their pre-trade activity.”

Municipal bond requests fell to 607 from 1,535 in December and 826 in the same period in 2017.

“This is particularly notable when factored against the overall slow pace of muni activity in 2017, which was the first time total annual muni CUSIP orders dropped below 16,000 since 2014 when 15,509 identifiers were sought,” CUSIP said in a release.

Among top state activities, CUSIPs for scheduled public finance offerings from Texas, California, and New York were the most active in January.

Secondary market
Low yields created a bevy of bid wanted volume on Friday afternoon, as a New York trader observed “the long end lagging a little bit” at midday.

He said there isn’t enough yield to entice investors to the long end of muni yield curve.

“The bid side is firm with volume tapering off,” he said.

Looking at the big NYC GO deal, he observed it was in demand by retail investors who are driving more new issue market demand than institutions, he said.

“There’s a little bit of cautiousness but as Treasuries have found some support levels, some more customers have participated,” he explained.

Previous session's activity
The Municipal Securities Rulemaking Board reported 45,325 trades on Thursday on volume of $12.99 billion.

California, Texas and New York were the states with the most trades, with the Golden State taking 15.675% of the market, the Empire State taking 10.813% and the Lone Star State taking 10.612%.

Lipper: Muni bond funds saw inflows
Investors in municipal bond funds again reversed course and put cash back into the funds in the latest week, according to Lipper data released on Thursday.

The weekly reporters saw $347.403 million of inflows in the week of Feb. 21, after outflows of $443.409 million in the previous week.
Exchange traded funds reported outflows of $18.979 million, after outflows of $60.759 million in the previous week. Ex-ETFs, muni funds saw $366.381 million of inflows, after outflows of $382.649 million in the previous week.

The four-week moving average was positive at $203.707 million, after being in the green at $312.146 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 had outflows of $52.672 million in the latest week after outflows of $102.806 million in the previous week. Intermediate-term funds had inflows of $491.709 million after inflows of $201.425 million in the prior week.

National funds had inflows of $354.086 million after outflows of $410.442 million in the previous week. High-yield muni funds reported outflows of $5.074 million in the latest week, after inflows of $20.088 million the previous week.

Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Vanessa Kim at 212-803-8474 for more information.

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Primary bond market Secondary bond market Municipal bond funds State of New York State of Texas State of California Los Angeles Department of Airports County of Baltimore, MD New York State Thruway Authority