Municipal bond traders are set for the start of a new week, with expected issuance totaling about $7.86 billion, down from the $10.55 billion that hit the market last week.
"Given the strong mutual fund flows into the market, and the positive technical backdrop for the market overall we feel most high quality issuers that come to the market (including Pennsylvania) will see very good demand," said Michael Pietronico, CEO at Miller Tabak Asset Management. "While Friday's employment report may move market yields higher over the next few days, it remains, in our view, a bond market that rewards investors who seek opportunities to invest at lower prices."
Secondary Market
Treasuries were weaker on Monday morning. The yield on the two-year Treasury rose to 0.73% from 0.72% on Friday, the 10-year Treasury yield moved up to 1.61% from 1.58% and the yield on the 30-year Treasury bond increased to 2.33% from 2.31%.
Top-quality municipal bonds finished weaker on Friday. The yield on the 10-year benchmark muni general obligation rose three basis points to 1.44% from 1.41% on Thursday, while the yield on the 30-year muni increased two basis points to 2.17% from 2.15%, according to the final read of Municipal Market Data's triple-A scale.
On Friday, the 10-year muni to Treasury ratio was calculated at 91.1% compared to 93.9% on Thursday, while the 30-year muni to Treasury ratio stood at 94.0% versus 95.3%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 27,225 trades on Friday on volume of $12.632 billion.
Prior Week's Actively Traded Issues
Revenue bonds comprised 51.31% of new issuance in the week ended Aug. 5, up from 51.08% in the previous week, according to Markit. General obligation bonds comprised 39.07% of total issuance, up from 38.73%, while taxable bonds made up 9.62%, down from 10.19%.
Some of the most actively traded issues by type were from New York, Texas and Wisconsin issuers. In the GO bond sector, the NYC 4s of 2035 were traded 71 times. In the revenue bond sector, the University of Texas 2s of 2041 were traded 57 times. And in the taxable bond sector, the Wisconsin 3.294s of 2037 were traded 50 times.
Previous Week's Top Underwriters
The top negotiated and competitive underwriters of last week included Morgan Stanley, JPMorgan Securities, Bank of America Merrill Lynch, Citigroup and Barclays according to Thomson Reuters data. In the week of July 31-Aug. 6, Morgan Stanley underwrote $1.37 billion, JPMorgan $1.04 billion, BAML $833 million, Citi $798 million and Barclays $606 million.
Primary Market
There are $5.80 billion of negotiated deals set for this week along with $2.05 billion of competitive sales, with the action kicking off on Tuesday.
The biggest deal of the week is set for Tuesday -- a $1.21 billion competitive sale from the state of Pennsylvania.
The Keystone State will be offering up the Second Series of 2016 general obligation bonds, which are rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.
In the negotiated sector on Tuesday, Barclays Capital Markets is set to price for retail investors the Regents of the University of California Medical Center's $1.05 billion of Series 2016L bonds and Series 2016M taxables. The deal, which will be priced for institutions on Wednesday, is rated Aa3 by Moody's and AA-minus by S&P.
Raymond James is expected to price the Fort Worth Independent School District, Texas' $374.44 million of unlimited tax refunding and school building bonds. The deal, which is backed by the Permanent School Fund guarantee program, is rated triple-A by Moody's and S&P.
Davidson Securities is set to price Lake Washington School District No. 414, King County, Wash.'s $203.7 million of Series 2016 unlimited tax GO and refunding bonds. The deal is rated Aa1 by Moody's and AA-plus by S&P.
Siebert Brandford Shank is expected to price the Bexar Hospital District, Texas' $190.36 million of Series 2016 limited tax refunding bonds. The deal is rated Aa1 by Moody's and AA-plus by S&P and Fitch.
Wells Fargo Securities is set to price Will County, Ill.'s $175 million of Series 2016 alternative revenue source GOs. The deal is rated triple-A by Moody's and S&P.
Citigroup is expected to price the Lexington County, S.C., Health Service District Inc.'s $171 million of hospital revenue bonds. The deal is rated A1 by Moody's, AA-minus by S&P and AA-plus by Fitch.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $11.2 million to $11.38 billion on Monday. The total is comprised of $3.38 billion of competitive sales and $8.0 billion of negotiated deals.
