Municipal bond traders on Tuesday are prepared for the start of the week's new issuance, as muni yields continue to stay above record low levels.
Secondary Market
U.S. Treasuries were narrowly mixed on Tuesday. The yield on the two-year Treasury was unchanged from 0.69% on Monday as the 10-year Treasury yield declined to 1.56% from 1.59% and the yield on the 30-year Treasury bond decreased to 2.28% from 2.30%.
Top quality municipal bonds finished steady to weaker on Monday. The yield on the 10-year benchmark muni general obligation was unchanged from 1.45% on Friday, while the yield on the 30-year muni rose one basis point to 2.11% from 2.10%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated at 91.5% on Monday compared to 91.1% on Thursday, while the 30-year muni to Treasury ratio stood at 91.7% versus 91.3%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 31,507 trades on Monday on volume of $7.85 billion.
Primary Market
This week's calendar is estimated at $6.66 billion, consisting of $5.06 billion of negotiated deals and $1.59 billion of competitive sales.
On Tuesday, the Massachusetts Bay Transportation Authority will competitively sell two separate sales tax and assessment refinancing deals totaling about $344 million.
The MBTA will be offering about $118.5 of Series 2016A assessment bonds and around $225.7 million of Series 2016A senior sales tax capital appreciation bonds.
The assessment bonds are rated Aa1 by Moody's Investors Service and triple-A by S&P Global Ratings and the senior sales tax bonds are rated Aa2 by Moody's and AA-plus by S&P.
On the short-term competitive slate, Colorado is set to sell $600 million of Series 2016A general fund tax and revenue anticipation notes.
The TRANs are rated MIG1 by Moody's and SP1-plus by S&P.
In the negotiated sector on Tuesday, Wells Fargo Securities will price the New York Metropolitan Transportation Authority's $520 million of Series 2016C transportation revenue bonds for retail investors ahead of the institutional pricing on Wednesday.
The deal is rated A1 by Moody's, AA-minus by S&P and A by Fitch.
Bank of America Merrill Lynch is expected to price the Port of Seattle, Wash.'s $250 million of first and intermediate lien revenue refunding bonds in four series.
The deal is rated Aa2 by Moody's and AA by Fitch.
Since 2006, the Port of Seattle has issued about $3.5 billion of debt, with the largest issuance occurring in 2012 when it sold $612 million of securities. The Port of Seattle is one of the largest container gateways in North America. It has come to market every year since 2006, except for 2014.
Citigroup is set to price Travis County, Texas' $121 million of limited tax refunding bonds. The deal is rated triple-A by Moody's and S&P.
Ramirez to Update Forecast for Gross Muni
Ramirez & Co. continues to forecast gross municipal supply at $378 billion for 2016 with continued negative net issuance, but is planning an update at the end of the third quarter.
"We plan to update our gross supply forecast at the end of Q3 2016 after the slow-down in August. Gross supply through June 2016 was $211.06 billion while net supply was $24.18 billion," according to Ramirez's weekly commentary. "We see net muni market supply at -$16.71 billion over the next 30 days, a reversal of the trend."
Ramirez also looked at the top 10 states with the most outstanding debt.
"New York stands to shrink the most (1.2%), followed by Texas (0.9%), Massachusetts (0.9%), and California (0.9%), Ramirez said. "Conversely, Pennsylvania is set to expand the most (1.3%), followed by Illinois (0.4%)."
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $839.6 billion to $13.45 billion on Tuesday. The total is comprised of $4.77 billion of competitive sales and $8.68 billion of negotiated deals.
