Municipal bond traders are keeping one eye on this week's $11.3 billion new issue slate while keeping the other one on falling bond yields.
Secondary Market
U.S. Treasuries were weaker on Monday. The yield on the two-year Treasury rose to 0.77% from 0.75% on Friday, while the 10-year Treasury yield gained to 1.73% from 1.71% and the yield on the 30-year Treasury bond increased to 2.57% from 2.55%.
Top quality municipal bonds finished mixed on Friday. The yield on its 30-year general obligation scale fell two basis points to a record low of 2.42% from 2.44% on Thursday, according to the final read of Municipal Market Data's triple-A scale. On Wednesday, the 30-year muni yield hit 2.45%, eclipsing the previous low of 2.47% set in November 2012.
Meanwhile, the yield on the 10-year benchmark muni on Friday was steady from 1.54% on Thursday, according to MMD. Its all-time low of 1.47% was also set in November 2012.
The 10-year muni to Treasury ratio was calculated at 90.4% on Friday compared with 87.6% on Thursday, while the 30-year muni to Treasury ratio stood at 94.8% versus 93.4%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 31,275 trades on Friday on volume of $11.86 billion.
Prior Week's Actively Traded Issues
Revenue bonds comprised 53.27% of new issuance in the week ended May 13, down from 55.33% in the previous week, according to data released by
General obligation bonds comprised 39.98% of total issuance, up from 38.75%, while taxable bonds made up 7.75%, up from 5.92%.
Some of the most actively traded issues by type were from California and New York issuers.
In the GO bond sector, the California 5s of 2026 traded 28 times. In the revenue bond sector, the New York State Thruway Authority 4s of 2056 traded 58 times. And in the taxable bond sector, the St. Lawrence Co. IDA, N.Y., 4.429s of 2056 traded 35 times, Markit said.
Primary Market
This week's supply estimated at $11.3 billion, consisting of $9.02 billion of negotiated deals and $2.28 billion of competitive sales.
"Strong demand has easily absorbed the manageable new issue flow of recent weeks and we expect solid demand to continue as the new issue calendar builds," Janney Municipal Strategist Alan Schankel wrote in a Monday market comment, adding, "The Bond Buyer's 30-day visible supply, at $17.2 billion, is as high as it has been since December 2014."
Action gets underway on Monday as the city of New York offers $800 million of Fiscal 2016 Series E and F general obligation bonds. Bank of America Merrill Lynch will price the city's bonds for retail on Monday and Tuesday ahead of the institutional pricing on Wednesday.
New York City GOs are rated Aa2 by Moody's Investors Service and AA by S&P Global Ratings and Fitch Ratings.
Also on Monday, Raymond James is expected to price Henrico County, Va.'s $124.24 million of water and sewer revenue and refunding bonds. The deal is rated Aa1 by Moody's and triple-A by S&P and Fitch.
On Tuesday, the biggest deal of the week – and one of the largest of the year – will be coming to market.
Citigroup is set to price the New York Transportation Development Corp.'s $2.5 billion bond deal for the LaGuardia Special Facilities Terminal B Redevelopment Project. It is expected the deal will be split into $2.35 billion of bonds subject to the alternative minimum tax and $150 million of taxable bonds. The deal is rated Baa3 by Moody's and triple-B by S&P.
Also on Tuesday, Goldman Sachs is expected to price the Municipal Improvement Corporation of Los Angeles' $800.22 million of lease revenue refunding bonds for retail investors ahead of the institutional pricing on Wednesday. The deal is rated A-plus by S&P and Fitch and AA-minus by Kroll Bond Rating Agency.
Piper Jaffray is set to price the Metropolitan Government of Nashville and Davidson County, Tenn.'s $298.98 million of Series 2016 GO refunding bonds. The deal is rated Aa2 by Moody's and AA by S&P.
In the competitive arena on Tuesday, the state of New Mexico is selling $332.79 million of severance tax bonds in two separate sales consisting of $282.86 million of Series 2016A and refunding Series 2016B severance tax bonds and $49.93 million of Series 2016C taxable severance tax bonds.
Loudoun County, Va., will competitively sell $144.67 million of Series 2016A GO public improvement and refunding bonds on Tuesday. The deal is rated triple-A by Moody's, S&P and Fitch.
The top negotiated and competitive underwriters of last week included JPMorgan, BAML, Morgan Stanley, Citigroup and Loop Capital Markets, according to Thomson Reuters data. In the week of May 8-14, JPMorgan underwrote $2.36 billion, BAML did $1.58 billion, Morgan Stanley had $530 million, Citi had $483 million and Loop did $459 million.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $639.0 million to $17.20 billion on Monday. The total is comprised of $6.32 billion of competitive sales and $10.88 billion of negotiated deals.
