Municipal CUSIP requests fall in July; NYC GOs price for institutions
Municipal CUSIP requests declined in July after four straight months of increases, CUSIP Global Services reported on Wednesday.
The total of all municipal securities, which includes bonds, long-term and short-term notes, and commercial paper, fell 28.9% in July from June levels. This is suggestive of a possible slowdown in new security issuance in the near term.
"It should not come as a big surprise that the four-month streak of monthly CUSIP request volume increases would come to an end in July," said Gerard Faulkner, director of operations for CUSIP. "Seasonality is clearly a factor as CUSIP requests historically tend to slow in the summer months, but we're also staring down the prospect of rising interest rates, which could have a more lasting impact on new issuance as the year progresses."
Total municipal identifier request volume is down 15% versus the same period last year, while muni bond request volume is down 16.6%.
Among top state issuers, CUSIPs for scheduled public finance offerings from New York, Texas, California, and Wisconsin were the most active last month.
The municipal bond market saw more supply hit the screens on Wednesday, topped by New York City’s big general obligation bond offering.
RBC Capital Markets priced New York City’s $809.555 million of tax-exempt general obligation bonds for institutions after a two-day retail order period. The deal includes Fiscal 2019 Series A and B GOs and Fiscal 1994 Series H, Subseries H3 GOs.
The city also competitively sold $60 million of taxable Fiscal 2018 Series C GOs. RBC Capital Markets won the bonds with a true interest cost of 3.3903%. The financial advisor is Public Resources Advisory Group and the bond counsel is Norton Rose.
The deals are rated Aa2 by Moody’s Investors Service, and AA by S&P Global Ratings and Fitch Ratings.
Jefferies received the official award on the New York Triborough Bridge and Tunnel Authority’s $270.09 million of Series 2018B general revenue refunding bonds for institutions on Tuesday after holding a one-day retail order period. The deal is rated Aa3 by Moody’s, AA-minus by S&P and Fitch and AA by Kroll Bond Rating Agency.
Piper Jaffray priced Houston’s $322,255 million of Series 2018D combined utility system first lien revenue refunding bonds. The deal is rated Aa2 by Moody’s and AA by Fitch.
Goldman Sachs priced the Michigan Finance Authority’s $288.765 million of Series 2018 senior lien distributable state aid revenue bonds for the Charter County of Wayne Criminal Justice Center. The deal is rated Aa3 by Moody’s.
In the competitive arena, the Johnson County Public Building Commission, Kan., sold $148.595 million of Series 2018A lease purchase revenue bonds for courthouse and medical examiners facility projects.
Wells Fargo Securities won the bonds with a TIC of 2.3934%. The deal is rated triple-A by Moody’s and S&P. The financial advisor is Springsted and the bond counsel is Gilmore & Bell.
Since 2008, the commission has sold about $511 million of bonds, with the most issuance prior to this year coming in 2008 when it offered $65.2 million of bonds. It did not come to market in 2013.
Wednesday’s bond sales
According to a New York trader, there have been some credit concerns among retail investors, as they have not reached for lower quality credits in lieu of high-quality bonds,
“People are being more careful," he said, noting recent credit concerns in Puerto Rico, New Jersey, and Illinois.
Municipal bonds were mostly weaker on Wednesday, according to a late read of the MBIS benchmark scale. Benchmark muni yields rose as much as one basis point in the one-year and six to 30-year maturities and fell less than a basis point in the two- to five-year maturities.
High-grade munis were mixed, with yields calculated on MBIS’ AAA scale rising as much as one basis point in the seven- to nine-year and 14- to 30-year maturities, falling as much as a basis point in the one- to six-year and 10- to 12-year maturities and remaining unchanged in the 13-year maturity.
Municipals were weaker on Municipal Market Data’s AAA benchmark scale, which showed the yield on the 10-year muni general obligation rising one basis point while the yield on the 30-year muni maturity increased two basis points.
Treasury bonds were stronger as stocks traded mixed.
On Wednesday, the 10-year muni-to-Treasury ratio was calculated at 83.8% while the 30-year muni-to-Treasury ratio stood at 98.7%, 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.
Bond Buyer 30-day visible supply at $10.32B
The Bond Buyer's 30-day visible supply calendar decreased $277.6 million to $10.32 billion for Wednesday. The total is comprised of $1.97 billion of competitive sales and $8.36 billion of negotiated deals.
NYC Water to sell $270M bonds
The New York City Municipal Water Finance Authority said that it plans to sell $270 million of tax-exempt fixed rate second general resolution revenue bonds on Wednesday, Aug. 15.
A retail order period will be held the morning of the sale.
The bonds will be priced by authority’s underwriting syndicate led by book-running lead manager RBC Capital Markets and joint lead managers Barclays and Blaylock Van. Raymond James and Siebert Cisneros Shank & Co. will serve as co-senior managers on the transaction.
Proceeds from the sale will be used to refund outstanding bonds.
Previous session's activity
The Municipal Securities Rulemaking Board reported 39,196 trades on Tuesday on volume of $11.64 billion.
California, Texas and New York were the states with the most trades, with the Golden State taking 19.695% of the market, the Lone Star State taking 12.295% and the Empire State taking 9.417%.
Treasury auctions $26B 1o-year notes
The Treasury Department auctioned $26 billion of 10-year notes with a 2 7/8% coupon at a 2.960% high yield, a price of 99.268892. The bid-to-cover ratio was 2.55.
Tenders at the high yield were allotted 35.06%. All competitive tenders at lower yields were accepted in full.
The median yield was 2.920%. The low yield was 2.867%.
Gary Siegel contributed to this report.
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.