The municipal bond market is preparing for a week that will see more than $8 billion in new issuance, with the bulk of that volume coming into the primary market on Wednesday and Thursday. The market will see action get started on Tuesday, with three good-sized deals coming into play from issuers from the states of Texas and Arizona.
A deal with Greece was cut over the weekend, which pushed bond prices lower initially but that deal still needs approval by the Greek legislature, so we can still expect to see ripple effects from Greece until it is approved.
Secondary Market
Treasury prices were mostly stronger on Tuesday morning, with the yield on the two-year Treasury note falling to 0.64% from 0.67% on Monday, while the 10-year yield dropped to 2.40% from 2.43% and the 30-year yield was flat at 3.21%.
On Monday, the yield on the 10-year benchmark muni general obligation at close was up one basis point to 2.33% from 2.32% on Friday, while the yield on the 30-year GO was unchanged from 3.31%, according to a final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Monday at 96.2% versus 96.0% on Friday, while the 30-year muni to Treasury ratio stood at 103.3% compared to 103.2%, according to MMD.
Primary Market
The city of San Antonio, Texas is expected to come to market with $317.71 million of electric and gas systems revenue refunding bonds, Series 2015 on Tuesday. The bonds will be priced by Goldman, Sachs and are rated Aa1 by Moody's Investors Service, AA by Standard and Poor's and AA-plus by Fitch Ratings.
Citi is scheduled to price the Arizona School Facilities Board's $258 million of refunding certificates of participation on Tuesday. The COPs are expected to mature serially from 2016-2023 and are rated triple-A by both Moody's and S&P.
Piper Jaffray is slated to price the Montgomery Independent School District's $245.28 million of unlimited tax building and refunding bonds on Tuesday. This deal by the Texas ISD is backed by the Permanent School Fund guarantee program and is rated triple-A by both Moody's and S&P.
In the competitive arena, Virginia Pubic School Authority will be selling $98.02 million of special obligation school financing bonds for Prince William County, Series 2015 on Tuesday. The county will use the proceeds to pay the costs of various capital school improvement projects for the County and to pay issuance costs. The deal is rated triple-A by Moody's, S&P and Fitch.
Also on docket this week, Bank of America Merrill Lynch is slated to price the Indiana Toll Road ITR Concession Co.'s $1 billion of senior secured notes on Wednesday, only months after the original private operator of the publicly owned toll road went bankrupt.
JPMorgan is expected to price on Wednesday the California State University Trustees' $1.1 billion of systemwide revenue bonds consisting of $1.07 million Series 2015A tax-exempts, due 2015-2014, and $30 million of Series 2015B taxable, due 2016-2035. The bonds are rated Aa2 by Moody's and AA-minus by S&P.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 35,869 trades on Monday on volume of $4.545 billion.
The most active bond, based on the number of trades was the FSU Financial Assistance Inc., Fla.'s Series 2015A educational and athletic facilities improvement revenue 4 ¼ of 2045, which traded an 94 times at an average price of 99.533 and an average yield of 4.274. The bonds were initially priced at 97.501 to yield 4.4%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.342 billion to $14.102 billion on Tuesday. The total is comprised of $3.01 billion competitive sales and $11.09 billion of negotiated deals.
