The municipal bond market is looking at another week of hefty primary issuance as yields begin to make an upward move. Total volume for the week is estimated at $8.64 billion, consisting of $7.10 billion of negotiated deals and $1.54 billion of competitive sales.
Secondary Market
Treasuries were narrowly mixed on Monday. The yield on the two-year Treasury rose to 0.89% from 0.87% on Friday, while the 10-year Treasury yield gained to 1.90% from 1.89% and the 30-year Treasury bond yield decreased to 2.70% from 2.71%.
Top-quality municipal bonds ended weaker on Friday. The yield on the 10-year benchmark muni general obligation rose four basis points to 1.90% from 1.86% on Thursday, while the 30-year muni yield increased two basis points to 2.90% from 2.88%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Friday at 101.6% compared to 102.2% on Thursday, while the 30-year muni to Treasury ratio stood at 107.4% versus 108.3%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 32,919 trades on Friday on volume of $7.40 billion.
Primary Market
The market will see a $2.3 billion general obligation bond sale from the state of California, a $1.3 billion offering from New York’s Empire State Development and a $608 million sale from the Las Vegas Valley Water District, Nev.
Citigroup is set to price California’s $2.05 billion of various purpose general obligation bonds on Tuesday, after a one-day retail order period on Monday. The deal is rated Aa3 by Moody’s Investors Service, AA-minus by Standard & Poor’s and A-plus by Fitch Ratings.
Bank of America Merrill Lynch will price the Empire State Development Corp. State Urban Development Corp.’s $1.23 billion of Series 2016A personal income tax revenue bonds on Wednesday after a one-day retail order period on Tuesday. The bonds are rated triple-A by S&P and AA-plus by Fitch.
The Las Vegas Valley Water District, Nev., is coming to market with two sales totaling $716 million. Citi is set to price the $608 million of GO improvement and refunding bonds on Tuesday. The deal is rated Aa1 by Moody’s and AA by S&P. Morgan Stanley is expected to price $108.39 million of limited tax GOs additionally secured by pledged revenues on Tuesday. This deal is rated Aa1 by Moody’s and AA-plus by S&P.
Mesirow Financial is expected to price Sweetwater Union High School, Calif.’s $264.5 million of GOs on Wednesday. The deal is rated A1 by Moody’s A-plus by S&P and triple-A by Fitch.
Citi is set to price Dallas Independent School District, Texas’ $262 million of unlimited tax school building bonds on Thursday.
BAML is set to price Indiana Finance Authority’s $175 million of Series 2016A&B state revolving fund program green bonds on Tuesday after a one-day retail order period on Monday. The deal is rated triple-A by Moody’s, S&P and Fitch.
In the competitive arena, Boston is selling $148.11 million of bonds on Tuesday in two sales consisting of $140 million of Series 2016A GOs and $8.11 million of Series 2016B GOs. The deals are rated triple-A by Moody’s and S&P.
Also on Tuesday, Lancaster, Pa., is competitively selling $125.8 million of Series 2016 GO combined purpose bonds. The deal is rated A1 by Moody’s.
The Prior Week's Most Actively Traded Issues
Revenue bonds comprised 52.30% of new issuance in the week ended March 4, up from 50.72% in the previous week, according to Markit. General obligation bonds comprised 40.31% of total issuance, down from 41.06%, while taxable bonds made up 7.39%, down from 8.22%, according to Markit.
Some of the most actively traded issues by type were in California, New York and Ohio. In the GO bond sector, the Los Angeles Unified School District, Calif., 4s of 2040 traded 31 times. In the revenue bond sector, the New York City Municipal Water Finance Authority 4s of 2038 traded 136 times. And in the taxable bond sector, the Ohio State University 3.798s of 2046 traded 64 times, Markit said.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $179.4 million to $11.65 billion on Monday. The total is comprised of $3.16 billion of competitive sales and $8.49 billion of negotiated deals.
