Municipal bond volume soars to nearly $12 billion next week as supply-starved buyers await the new issue slate.
Ipreo forecasts weekly bond volume at $11.8 billion, up from a revised total of $5.3 billion in the past week, according to updated data from Thomson Reuters. The calendar is composed of $11.1 billion of negotiated deals and $725.7 million of competitive sales.
Topping the new issue slate is a $2.28 billion deal from the city and county of Denver.
Bank of America Merrill Lynch is expected to price the airport system subordinate revenue bonds on Tuesday. The offering consists of Series 2018A bonds subject to the alternative minimum tax and Series 2018B non-AMT bonds. Proceeds of the sale will be used to refund certain revenue bonds.
The deal is rated A2 by Moody’s Investors Service, A by S&P Global Ratings and A-plus by Fitch Ratings.
Also in the aviation sector, Miami-Dade County is coming to market with a $716.55 million issue.
JPMorgan Securities is expected to price the aviation revenue refunding bonds on Wednesday after a one-day retail order period. The offering consists of Series 2018A AMT bonds, Series 2018B non-AMT bonds and Series 2018C taxable bonds. Proceeds of the sale will be used to finance some of the costs of the airport’s 2018-2022 capital program and to refund certain revenue bonds.
The deal is rated A by S&P and Fitch and AA-minus by Kroll Bond Rating Agency.
Also on tap, Citigroup is set to price the Allegheny County Hospital Development Authority, Pa.’s $915 million of Series 2018A revenue bonds for the Allegheny Health Network Obligated Group on Wednesday. The deal is rated A by S&P.
Siebert Cisneros Shank & Co. is expected to price Connecticut’s $889.135 million of general obligation bonds on Wednesday after a one-day retail order period.
The issue consists of Series 2018E GOs, Series 2018F refunding GOs, Series 2018A taxable GOs. The deal is rated A1 by Moody’s, A by S&P, A-plus by Fitch and AA-minus by Kroll Bond Rating Agency.
Bond Buyer 30-day visible supply at $16.06B
The Bond Buyer's 30-day visible supply calendar increased $7.24 billion to $16.06 billion for Friday. The total is comprised of $1.77 billion of competitive sales and $14.29 billion of negotiated deals.
Municipal bonds were stronger on Friday, according to a midday read of the MBIS benchmark scale. Benchmark muni yields fell as much as two basis points in the one- to 30-year maturities.
High-grade munis were mostly stronger, with yields calculated on MBIS’ AAA scale falling as much as one basis point in the two- to 30-year maturities and rising one basis point in the one-year maturity.
Municipals were stronger on Municipal Market Data’s AAA benchmark scale, which showed the yield on the 10-year muni general obligation falling one to three basis points while the yield on the 30-year muni maturity dropped as much as two basis points.
"The market is slow and underperforming Treasuries," said one New York municipal department manager, who described more selling than buying.
He said one institution hoped to get some bids on a large list of short bonds — maturing between one and four years — due to the extreme lack of supply.
"Apparently, they want to take advantage of the extreme richness of munis in that part of the curve," he said.
Despite the overall lack of activity toward week end, the manager said he noticed a "good deal of trading focus has been on Puerto Rico bonds, since the announcement of a consensual agreement among COFINA creditors.
Treasury bonds were stronger as stock prices fell.
On Thursday, the 10-year muni-to-Treasury ratio was calculated at 84.6% while the 30-year muni-to-Treasury ratio stood at 99.7%, according to MMD. The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasury with comparable maturities. If the muni/Treasury ratio is above 100%, munis are yielding more than Treasury; if it is below 100%, munis are yielding less.
Previous session's activity
The Municipal Securities Rulemaking Board reported 39,987 trades on Thursday on volume of $17.281 billion.
Puerto Rico, California and New York were the municipalities with the most trades, with Puerto Rico taking 15.886% of the market, the Golden State taking 14.29% and the Empire State taking 9.8%.
Week's actively traded issues
Some of the most actively traded munis by type in the week ended Aug. 10 were from Puerto Rico, California and Connecticut issuers, according to Markit.
In the GO bond sector, the Puerto Rico Commonwealth 8s of 2035 traded 79 times. In the revenue bond sector, the California Statewide Communities Development Authority 5.5s of 2058 traded 74 times. And in the taxable bond sector, the New Haven, Conn., 4.834s of 2033 traded 22 times.
Week's actively quoted issues
Illinois, New York and California names were among the most actively quoted bonds in the week ended Aug. 10, according to Markit.
On the bid side, the Illinois Finance Authority revenue 5.25s of 2052 were quoted by 97 unique dealers. On the ask side, the NYC Transitional Finance Authority BARB 3.5s of 2047 were quoted by 293 dealers. And among two-sided quotes, the California taxable 7.7s of 2050 were quoted by 26 dealers.
Lipper: Muni bond funds saw inflows
Investors in municipal bond funds reversed course and put cash back into the funds during the latest reporting week, according to Lipper data released on Thursday.
The weekly reporters saw $622.556 million of inflows in the week ended Aug. 8, after outflows of $368.353 million in the previous week.
Exchange traded funds reported inflows of $43.513 million, after outflows of $115.709 million in the previous week. Ex-ETFs, muni funds saw $579.043 million of inflows, after outflows of $252.643 million in the previous week.
The four-week moving average remained positive at $515.689 million, after being in the green at $522.791 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 inflows of $369.991 million in the latest week after outflows of $294.317 million in the previous week. Intermediate-term funds had inflows of $167.562 million after inflows of $60.620 million in the prior week.
National funds had inflows of $565.261 million after outflows of $262.958 million in the previous week. High-yield muni funds reported inflows of $263.825 million in the latest week, after outflows of $78.037 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 Ziad Saba at 212-803-6079 for more information.