Prices of top-rated municipal bonds were unchanged at mid-session, according to traders, halting the downward trend in yields since the Federal Open Market Committee meeting last week.
Secondary Market
The yield on the 10-year benchmark muni general obligation was unchanged from 1.94% on Friday, while the yield on 30-year GO was flat at 2.76%, according to a read of Municipal Market Data's triple-A scale.
Treasury prices were mostly unchanged on Monday. The yield on the two-year Treasury note was flat at 0.58% on Friday, while the 10-year yield slipped to 1.92% from 1.93% and the 30-year yield was flat at 2.51%.
On Friday, the 10-year muni to Treasury ratio was calculated at 100.6% versus 99.8% on Thursday, while the 30-year muni to Treasury ratio stood at 110.2% compared to 109.2%.
Top Traded Munis by Sector
Muni bonds from issuers in Kentucky, New York and California were the most actively traded bonds by market sector in the week ended March 20, according to data released by Markit.
Broken down by market sector, revenue bonds comprised 55.78% of new issuance, up from 54.31% in the prior week. GOs comprised 36.97% of total issuance, down from 37.69%, while taxables made up 7.29%, down from 8.00%.
In the revenue bond sector for the week ended March 20, the Kentucky State Municipal Power Agency power system 4s of 2039 were traded 82 times. In the GO bond sector, New York City 5s of 2034 were traded 66 times. And in the taxable bond sector, the University of California 4.131s of 2045 were traded 76 times, according to Markit.
Muni Performance Positive in March
Bank of America Merrill Lynch reported in its latest research note that muni returns for the month-to-date are positive, with its Muni Master Index returning 0.334% compared to 0.334% for the Government Master Index and negative 0.009% for the Corporate Master Index. For the month to date, new muni issuance is at $28.9 billion. This brings issuance for the year to $90.3 billion, up 57.1% versus the same period last year, Bank of America Merrill Lynch said.
Primary Market
Traders' eyes are on the week's new issue calendar. Volume is estimated at $8.9 billion, consisting of $6.4 billion of negotiated deals and $2.6 billion of competitive sales.
Topping the calendar is the $1.7 billion tobacco bond deal from California's Golden State Tobacco Securitization Corp. The deal, scheduled to be priced by Citigroup Global Markets on Tuesday after a one-day order period, is rated A1 by Moody's Investors Service, AA by Standard & Poor's and A by Fitch Ratings.
Citigroup is also expected to price the Northeast Independent School District, Texas' $390 million of Series 2015 bonds on Tuesday. The bonds are rated triple-A by Moody's and S&P.
Also slated is the Virginia College Building Authority's $636 million Series 2015 A and B bonds scheduled to be priced by J.P. Morgan Securities on Thursday after a one-day retail order period. The bonds are rated Aa1 by Moody's and AA-plus by S&P and Fitch.
Leading off the competitive slate are two separate sales on Wednesday from Anne Arundel County, Md., totaling $384 million. The first sale is a $269 million of general obligation bond offering while the second is a $115 million GO refunding bond sale. The issues are rated Aa1 by Moody's, triple-A by S&P and AA-plus by Fitch.
The county last sold GOs on March 25, 2014, when Bank of America Merrill Lynch won $206 million of Series 2014 consolidated general improvement bonds with a true interest cost of 2.9496%.
On Tuesday, the University of Kentucky will sell three competitive issues of general receipts refunding bonds totaling $282 million. The sales consist of $149 million of Series A bonds, $111 million of Series B bonds and $22 million of Series C bonds. All three issues are rated Aa2 by Moody's and AA by S&P.
The university last sold bonds on June 26, 2014, when Morgan Stanley won $99.675 million of bonds with a TIC of 2.0213%.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $910.6 million to $12.739 billion on Monday. The total is comprised of $4.308 billion competitive sales and $8.431 billion of negotiated deals.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 32,891 trades on Friday on volume of $7.919 billion. Most active on Thursday, based on the number of trades, was the Henrico County Economic Development Authority, Va., Series 2015 residential care facilities revenue refunding mortgage bonds for Westminster Canterbury 4s of 2033, which traded 193 times at an average price of 98.719 with an average yield of 4.099%; (initial offering price of 98.712 and an initial offering yield of yield of 4.00%).
