The municipal bond market is set for the start of the week's $5.42 billion new issue slate, which will be led off on Tuesday by the competitive sale from a Virginia issuer and a negotiated deal out of a New York City suburb.
The Federal Open Market Committee begins its two-day meeting on Tuesday, culminating with an announcement on Wednesday that's expected to leave rates unchanged.
Secondary Market
Treasuries were mostly stronger in early trading Tuesday morning. The yield on the two-year Treasury dipped to 0.85% from 0.87% on Monday, while the 10-year Treasury yield fell to 2.01% from 2.02% and the 30-year Treasury bond yield remained flat at 2.80%.
Municipals finished mostly stronger on Monday. The yield on the 10-year benchmark muni general obligation was steady from 1.75% on Friday, while the 30-year muni yield fell one basis point to 2.75% from 2.76%, 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 86.5% compared to 85.4% on Friday, while the 30-year muni to Treasury ratio stood at 98.1% versus 97.8%, according to MMD.
Primary Market
On Tuesday, Fairfax County, Va., will competitively sell $371.47 million of Series 2016A public improvement and refunding bonds. The deal is rated triple-A by Moody's Investors Service, Standard & Poor's and Fitch Ratings.
The county last competitively sold comparable bonds on Feb. 18, 2015, when Citigroup won $227.34 million of Series 2015A public improvement bonds with a true interest cost of 2.68%.
Ramirez & Co. is scheduled to price Nassau County, N.Y.'s $273 million of Series 2016A GO general improvement bonds on Tuesday. The deal is rated A2 by Moody's, A-plus by S&P and A by Fitch.
Wells Fargo Securities is slated to price the Airport Commission of the City and County of San Francisco's $239.77 million of second series revenue refunding bonds for the San Francisco International Airport on Tuesday. The deal is rated A1 by Moody's and A-plus by S&P and Fitch.
Raymond James & Associates is slated to price the Lamar Consolidated Independent School District, Texas' $141.11 million of unlimited tax refunding bonds on Tuesday. The issue is backed by the Permanent School Fund guarantee program and rated triple-A by Moody's and S&P.
Goldman Sachs is set to price the Nebraska Public Power District's $139.15 million general revenue bonds on Tuesday. The deal is expected to be rated A1 by Moody's, A by S&P and A-plus by Fitch.
The largest deal of the week comes on Wednesday from the Chicago Board of Education. JPMorgan Securities is scheduled to price the $875 million of unlimited tax general obligation bonds of dedicated revenues.
The issue is slated to consist of $795.52 million of Series 2016A tax-exempt GOs in three term maturities of 2035, 2040 and 2044. The $79.49 million of Series 2016B taxables are tentatively structured as a 2033 bullet.
The Chicago BOE has seen rating downgrades, state takeover talk and a cash crunch as of late. S&P cut the CPS two notches to B-plus while Fitch chopped its rating by three notches, also to B-plus. The schools get their highest marks from Kroll Bond Ratings Agency, which gives the Board of Ed a grade of triple-B.
Since 2005, the windy city BOE has sold about $6.9 billion of bonds, with the most issuance occurring in 2009 and 2010 when it issued $1.1 billion and $845 million, respectively. The board did not come to market at all in 2014 and issued only $356 million in 2006. The BOE has issued an average of 2.6 times a year since 2005.
Also on Wednesday, the Massachusetts Clean Water Trust will be competitively selling $211.44 million of Series 19 state revolving fund green bonds. The issue is rated triple-A by Moody's, S&P and Fitch.
On Thursday, JPMorgan is set to price the Connecticut Health and Educational Facilities Authority's $250 million of revenue bonds for Yale University in a remarketing of two- and five-year put bonds. The issue is rated triple-A by Moody's and S&P.
Also on Thursday, Waco, Texas, will competitively sell two issues totaling $104.31 million. The sales consist of $77.75 million of Series 2016 combination tax and revenue certificates of obligation and $26.56 million of Series 2016 GO refunding bonds. Both issues are rated Aa2 by Moody's and AA-plus by S&P.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 34,477 trades on Monday on volume of $5.412 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $108.8 million to $8.29 billion on Tuesday. The total is comprised of $2.81 billion competitive sales and $5.48 billion of negotiated deals.
