Municipal market participants will get the first supply wave, including the second largest negotiated deal and the biggest competitive deal of the week.

The muni market continued to extend the firmer tone on Tuesday that began last week, while it also displayed signs of strength regardless of its taxable counterpart’s activity heading to midday.

“It seems like even though the Treasury market is weaker, the municipal new issue market is doing very well,” Pete Stare of Hilltop Securities said in an interview Tuesday just before noon.

“We have reinvestment money from the first of June getting into the market, so the cash versus supply is a fairly good ratio,” he explained, noting there is some pent-up demand stemming from first-quarter scarcity.

“The market in quarter one was hamstrung by the lack of volume, but now with a pick up in supply over the last week to give them guidance, it has gotten buyers’ attention and and they are able to focus,” he added.

Outside of the market technicals, Stare said there is little uncertainty on the economic front to worry investors and that is contributing to a positive tone overall.

“The Fed has been fairly predictable and has been telegraphing to the market what their next move will be, and it doesn’t look like inflation is a concern in the market at this point in time,” he said.

Raymond James & Associates priced the Dormitory Authority of the State of New York’s $585.795 million of Series 2018 A, B, C, D and E school districts financing program revenue bonds for retail investors on Tuesday. Institutional pricing will take place on Wednesday.

The Series A bonds are rated Aa3 by Moody’s Investors Service and AA-minus by Fitch Ratings, with the exception of the 2033-2034, 2038, 2043 and 2047 maturities which are insured by Assured Guaranty Municipal Corp. and rated AA plus by S&P Global Ratings.

The Series B bonds are rated Aa2 by Moody’s and AA-minus by Fitch; the Series C bonds are rated AA by S&P and AA-minus by Fitch; and the Series D bonds are rated Aa1 by Moody’s and AA-minus by Fitch.

The Series E bonds are rated AA by S&P, with the exception of the 2019 maturity which is uninsured and rated Aa3 by Moody’s and AA-minus by Fitch.

In the competitive arena, the City and County of San Francisco sold $382.04 million of general obligation bonds in three sales on Tuesday.

The $189.735 million of Series 2018C 2014 earthquake safety and emergency response GOs were won by Morgan Stanley with a true interest cost of 3.16%. The $142.23 million of Series 2018D taxable 2015 affordable housing GOs were won by Wells Fargo with a TIC of 3.78%. And the $50.075 million of Series 2018E 2016 public health and safety GOs was won by Citi. The deals are rated Aaa by Moody’s and AA-plus by S&P and Fitch.

Since 2008, the city and county of San Francisco has sold about $6.19 billion of securities, with the most issuance occurring in 2017 when it sold $1.04 billion and the least in 2013 when it sold $306 million.

Morgan Stanley priced the California Statewide Communities Development Authority's $158 million of revenue green bonds and taxable revenue bonds for Marin General Hospital. The deal is rated A-minus by S&P and Fitch.

Tuesday's bond sales

New York:
Click here for the DASNY $586M retail pricing

California:

Click here for the San Fran $189M pricing

Click here for the San Fran $142M pricing

Click here for the San Fran $50M pricing

Click here for the $91M Calif. Statewide CDA green bond pricing

Click here for the $67M Calif. Statewide CDA taxable pricing

Bond Buyer 30-day visible supply at $12.52B
The Bond Buyer's 30-day visible supply calendar decreased $112.8 million to $12.52 billion on Tuesday. The total is comprised of $4.41 billion of competitive sales and $8.11 billion of negotiated deals.

Secondary market
Municipal bonds were mostly stronger on Tuesday, according to a midday read of the MBIS benchmark scale.

Benchmark muni yields fell by no more than one basis point in 26 maturities, as the nine- and ten-year spots on the curve were flat. The one- and two year maturities were higher by less than one basis point.

High-grade munis were also stronger with yields calculated on MBIS’ AAA scale falling less than a basis point on 28 maturities, with the one- and two-year maturities nudging up by less than a basis point.

Municipals were mixed according to Municipal Market Data’s AAA benchmark scale, which showed the 10-year general obligation muni yield steady and the 30-year muni maturity flat but the 2020 through 2026 spots on the curve have yields lowering by as many as four basis points.

On Monday, the 10-year muni-to-Treasury ratio was calculated at 82.5% while the 30-year muni-to-Treasury ratio stood at 95.3%, according to MMD.

Previous session's activity
The Municipal Securities Rulemaking Board reported 36,840 trades on Monday on volume of $9.067 billion.

California, New York and Texas were the states with the most trades, with the Golden State taking 15.111% of the market, the Empire State taking 14.255% and the Lone Star State taking 10.216%.

Treasury auction
The Treasury Department Tuesday auctioned $45 billion of four-week bills at a 1.660% high yield, a price of 99.870889.

The coupon equivalent was 1.685%. The bid-to-cover ratio was 3.22.

Tenders at the high rate were allotted 89.10%. The median rate was 1.650%. The low rate was 1.620%.

Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Vanessa Kim at 212-803-8474 for more information.

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Aaron Weitzman

Aaron Weitzman

Aaron Weitzman is a markets reporter for The Bond Buyer, focusing on the sell side of the municipal bond market.
Christine Albano

Christine Albano

Christine Albano is a reporter in the Investor’s & Investing beat, which she has covered for the past two decades. She has a wide range of buy side sources in the municipal market.