Prices of top-rated municipal bonds were a bit stronger at mid-session, according to traders, ahead of this week's $8.2 billion new issue slate and the two-day meeting of the Federal Open Market Committee.
Secondary Market
The yield on the 10-year benchmark muni general obligation on Monday was down as much as one basis point from 2.14% on Friday, while the yield on 30-year GO was as much as one basis point lower from 2.94%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were mixed on Monday. The yield on the two-year Treasury note was flat from 0.64% on Friday, while the 10-year yield fell to 2.08% from 2.11% and the 30-year yield dropped to 2.66 from 2.68%.
The FOMC's Tuesday to Wednesday meeting on monetary policy is keeping a damper on trading as market participants speculate about what stance the Fed would take on interest rates. After Wednesday's statement, the Fed will release a summary of its economic projections followed by a press conference with Chair Janet Yellen.
Also constraining price movement on Monday was the Treasury Department's continuing halt of SLGS sales and the start of Congressional debate on raising the debt limit.
On Friday, the 10-year muni to Treasury ratio was calculated at 100.4% versus 102.1% on Thursday, while the 30-year muni to Treasury ratio stood at 108.6% compared to 109.7%.
Primary Market
The muni market was looking ahead to the upcoming week's volume, after digesting an extra heavy portion of bonds in the previous week. There are $6.9 billion of negotiated deals scheduled and $1.3 billion of competitive sales slated.
Topping the calendar is the city and county of Honolulu, Hawaii's $879 million of Series A-D tax-exempt and Series E taxable general obligation bonds, scheduled to be priced by Bank of America Merrill Lynch. The bonds are rated Aa1 by Moody's Investors Service and AA-plus by Fitch Ratings.
Citigroup Global Markets is expected to price the North Carolina Medical Care Commission's $376 million of bonds for Vidant Health. The issue is expected to be structured as serials from 2016-35 with a 2039 term bond.
Citi is also scheduled to price the state of Oregon's $296 million of GOs, under Article XI for state projects.
And Goldman, Sachs is set to price the Illinois Finance Authority's $283 million of Series 2015C revenue refunding bonds for the Silver Cross Hospital and Medical Center.
The largest competitive bond sale during the week is set for Wednesday - the Omaha Public School District No. 001, Neb.'s $141 million of Series 2015 GOs. The bonds, rated Aa1 by Moody's Investors Service and triple-A by Standard & Poor's, mature serially from 2024 to 2040. The school district last sold bonds competitively on July 11, 2001, when Merrill Lynch won $100 million of Series 2001B GOs with a true interest cost of 5.0372%.
On the competitive note slate is a $200 million sale from Baltimore County, Md., on Tuesday.
The sale is composed of $112 million of consolidated public improvement bond anticipation notes and $88 million of Metropolitan District BANs. The notes are rated MIG-1 by Moody's, SP-1-plus by S&P and F-1-plus by Fitch.
Baltimore County last sold bonds on Dec. 10, 2014, when JPMorgan won $200 million public improvement and Metropolitan District bonds with a TIC of 3.0093%. Baltimore County sold notes in two sales on Jan. 24, 2013; Merrill Lynch won the $212 million Metropolitan District BANs with a TIC of 0.1642% and PNC Capital Markets won $11.83 million of certificates of participation with a TIC of 1.3477%.
Top Traded Munis by Sector
Munis from issuers from Rhode Island, California and Connecticut were the top traded bonds by market sector in the week ended March 13, according to data released by Markit.
Broken down by market sector, revenue bonds comprised 54.31% of new issuance, down from 56.00% in the prior week. GOs comprised 37.69% of total issuance, up from 36.29%, while taxables made up 8.00%, up from 7.71%.
In the revenue bond sector for the week ended March 13, the Rhode Island Tobacco Settlement Financing Corp. 5s of 2040 were traded 56 times. In the GO bond sector, California 5s of 2045 were traded 67 times. And in the taxable bond sector, the Hamden, Conn., 5.2s of 2044 were traded 34 times, according to Markit.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $350.7 million to $11.494 billion on Monday. The total is comprised of $2.742 billion competitive sales and $8.752 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 33,792 trades on Friday on volume of $10.444 billion.
Most active on Friday, based on the number of trades, was the Louisiana Public Facilities Authority revenue refunding bond for the Franciscan Missionaries of Our Lady Health System Project Series 2015A 4s of 2039, which traded 235 times at an average price of 99.522 with an average yield of 4.025%; (initial offering price of 99.714 and an initial offering yield of yield of 4.15%).
