Prices of top-rated municipal bonds finished weaker on Monday ahead of the new $8.69 billion weekly supply slate which is topped by a $1.4 billion note sale from the city of Los Angeles in the short-term sector and a $939 million Massachusetts general obligation bond sale on the long-term calendar.
The yield on the 10-year benchmark muni general obligation closed up two basis points to 2.29% from 2.27% on Friday, while the yield on the 30-year GO rose two basis points to 3.28% from 3.26%, according to the final read of Municipal Market Data's triple-A scale.
Trading was light in the secondary, according to Interactive Data.
Treasury prices were also lower on Monday with the yield on the two-year Treasury note rising to 0.65% from 0.62% on Friday, while the 10-year yield rose to 2.35% from 2.27% and the 30-year yield increased to 3.15% from 3.06%.
The 10-year muni to Treasury ratio was calculated on Monday at 97.0% versus 101.3% on Friday, while the 30-year muni to Treasury ratio stood at 104.1% compared to 106.2%, according to MMD.
Primary Market
There are $7.16 billion of negotiated deals scheduled for sale this week along with $1.53 billion of competitive offerings.
Siebert Brandford and Shank priced for retail the New York State Environmental Facilities Corp.'s $216.87 million of Series 2015A state clean water and drinking water revolving funds revenue bonds for the New York City Municipal Water Finance Authority Projects/Second Resolution subordinated SRF bonds.
The issue was priced to yield from 1.03% with a 3% coupon in 2018 to 3.43% with a 5% coupon in 2045. No retail orders were taken in the 2031 to 2034, 2036 to 2039 or 2041 to 2044 maturities. The 2016 and 2017 maturities were offered as sealed bids. The bonds are rated triple-A by Moody's Investors Service and Standard & Poor's and AA-plus by and Fitch Ratings.
Citi priced and repriced the University of Vermont and State Agricultural College's $186.94 million of general obligation bonds on Monday. The bonds were priced as 5s to yield from 1.22% in 2018 to 3.95% in 2035. A split 2040 term bond was priced as 4s to yield 4.14% and 5s to yield 3.74% and a split 2045 term was priced as 5s to yield 3.81 and as 4 1/8s to yield 4.21%%. The deal is rated Aa3 by Moody's and A-plus by S&P.
Bank of America Merrill Lynch is slated to price the Massachusetts GOs, consolidated loan of 2015, as Series C refunding bonds and Series 2015 A bonds for institutional investors on Tuesday. The GOs are rated Aa1 by Moody's and AA-plus by S&P and Fitch.
On Tuesday, Citi is expected to price the Philadelphia Authority for Industrial Development's $273 million of revenue bonds for Temple University. The bonds are rated Aa3 by Moody's and A-plus by S&P.
The largest sale on the competitive calendar is Tuesday's offering from Seattle, Wash. The city is selling $164 million of Series 2015A municipal light and power revenue bonds. The issue is rated Aa2 by Moody's and AA by S&P. The last time the city competitively sold comparable bonds was on Oct. 22, 2014 when Wells Fargo Securities won $265.21 million of Series 2014 municipal light and power improvement and refunding revenue bonds with a true interest cost of 3.096%.
On Wednesday, Stifel is set to price the city of Los Angeles' $1.39 billion of Series 2015 tax and revenue anticipation notes. The TRANs are rated MIG1 by Moody's and SP1-plus by S&P.
BAML will price FirstEnergy Nuclear Generation Corp.'s $296 million of pollution control revenue refunding bonds on Wednesday. The bonds are rated Baa3 by Moody's and BBB-minus by S&P.
BAML is also slated to price the Maryland Health and Higher Educational Facilities Authority's $263 million of Series 2015 revenue bonds for the Meritus Medical Center. The deal will have a retail order period on Wednesday. The bonds are rated BBB by S&P and Fitch.
Stifel is set to price the Industry Public Facilities Authority, Calif.'s $250 million of Series 2015B taxable tax allocation refunding bonds for the Industrial Redevelopment Project No. 2 on Thursday, The deal is rated A-minus by S&P.
Also, Wayne County, Mich., may sell $186.9 million of delinquent tax anticipation notes on Wednesday or Thursday. The DTANs are expected to be priced by Bank of America Merrill Lynch. Public Financial Management is municipal advisor and Axe & Ecklund is note counsel. The county has tapped Orrick, Herrington & Sutcliffe as special bankruptcy counsel.
The deal was postponed from last week after County Executive Warren Evans asked the state for fiscal intervention to help the county fix its financial problems.
BAML: Issuance Slows, Still on Track for $400B in '14
While municipal bond issuance has slowed from the fast and furious pace seen earlier this year, it is still on track to surpass 2014's totals, according to a new report from Bank of America Merrill Lynch Global Research.
As of June 18, issuance for the month-to-date was $24.2 billion, up 6.4% compared to the same period last year.
Issuance for the year-to-date is $205.8 billion, up 45.1% versus the same time last year. Of the total issuance so far this year, 66.5% has been related to refundings, compared to 51.1% in the same period in 2014.
"For the month, we are still ahead of last year, but below our original forecasts," the report said. "Nevertheless, we should realize our $400 billion estimate for the full year."
The market posted a relatively strong performance in June, the report stated.
The BofAML Muni Master Index returned -0.300% as of June 18, outperforming the Government Master Index and the Corporate Master Index which returned -1.181% and -1.742%, respectively. For the year to date, the muni index has returned -0.062% and outperformed both the Treasury and corporate indexes which had total returns of -0.296% and -0.563%, respectively.
The best performance in munis for the year-to-date has been in the one- and three-year maturities and the high-yield sector.
Prior Week's Actively Traded Issues by Sector
Revenue bonds comprised 53.86% of new issuance in the week ended June 19, down from 56.14% in the previous week, according to Markit. General obligation bonds comprised 38.03% of total issuance, up from 36.13%, while taxable bonds made up 8.11%, up from 7.73%.
Some of the most actively traded issues last week were in New York, Los Angeles and Puerto Rico names.
In the revenue bond sector, the New York City Transitional Finance Authority's BARB 4s of 2044 were traded 73 times. In the GO bond sector, the Puerto Rico commonwealth GO 8s of 2035 were traded 37 times. And in the taxable bond sector, the Los Angeles Unified School District's 5.981s of 2027 were traded 13 times, according to Markit.
