Municipal bond traders will be looking east and west on Tuesday as big deals from California and New York are set to be priced for institutions after being offered to retail investors on Monday.
Secondary Market
Treasuries were higher on Tuesday. The yield on the two-year Treasury fell to 0.88% from 0.90% on Monday, while the 10-year Treasury yield dropped to 1.85% from 1.90% and the 30-year Treasury bond yield decreased to 2.64% from 2.71%.
Top-rated municipal bonds ended steady on Monday. The yield on the 10-year benchmark muni general obligation ended steady on Monday from 1.90% on Friday, while the 30-year muni yield was unchanged from 2.90%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Monday at 100.0% compared to 101.6% on Friday, while the 30-year muni to Treasury ratio stood at 107.4% versus 107.4%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 33,192 trades on Monday on volume of $5.19 billion.
Primary Market
Citigroup is set to price California’s $2.36 billion of general obligation bonds for institutions after a one-day retail order period.
The $789.42 million of various purpose GOs were priced for retail as 3s to yield 0.81% in part of a 2018 split maturity, as 3s to yield 0.98% in part of a 2019 split maturity as 4s to yield 3.52% and as 5s to yield 3.17% in a split 2045 maturity. No retail orders were taken in the second half of the 2018 and 2019 maturities or in the 2020-2026 maturities. The 2016 and 2017 maturities were offered as sealed bids. The $69.98 million of school facilities GOs had no retail order period for the 2031 and 2032 maturities.
The $1.25 billion of various purposed GO refunding bonds were priced for retail to yield from 0.81% with 4% and 5% coupons in a split 2018 maturity to 3.32% with a 4% coupon and 2.97% with a 5% coupon in a split 2036 maturity. There were no retail orders taken in the 2029-2035 maturities. The 2016 and 2017 maturities were offered as sealed bids.
The deal is rated Aa3 by Moody’s Investors Service, AA-minus by Standard & Poor’s and A-plus by Fitch Ratings.
Since 2006, the state of California issued bonds an average of 8.4 times a year, selling about $93 billion, with the largest issuances in 2007 and 2009 when it offered $12.2 billion and $23.2 billion, respectively. The lows came in 2006 and 2011, when it issued $4.6 billion and $4.9 billion.
Bank of America Merrill Lynch is set to price the Empire State Development Corp. Urban Development Corp.’s $1.25 billion of Series 2016A general purpose personal income tax revenue bonds for institutions after a one-day retail order period.
The New York issue was priced to yield from 0.66% with a 5% coupon in 2018 to 2.25% with a 5% coupon in 2026, and as 4s to yield 3.24% in 2036 to 3.50% at par in 2038; no retail orders were taken in the 2027-2032 or 2034-2035 maturities.
The bonds are rated AAA by S&P and AA-plus by Fitch.
Since 2010, the ESDC has issued about $9.75 billion of debt, with the most issuance occurring in 2013 when it sold $3.28 billion of bonds after not coming to market in 2012.
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.
BAML is set to price Indiana Finance Authority’s $175 million of Series 2016A&B state revolving fund program green bonds on Tuesday. 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.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $575.4 million to $12.22 billion on Tuesday. The total is comprised of $3.38 billion of competitive sales and $8.84 billion of negotiated deals.
