Municipal bond traders were gearing up to take on more supply Tuesday as the biggest deal of the week is set to hit the market.
Secondary Trading
U.S. Treasuries were stronger on Tuesday. The yield on the two-year Treasury fell to 0.84% from 0.87% on Monday, while the 10-year Treasury yield dropped to 1.90% from 1.92% and the 30-year Treasury bond yield decreased to 2.70% from 2.72%.
Top shelf municipal bonds ended weaker on Monday. The yield on the 10-year benchmark muni general obligation rose one basis point to 1.84% from 1.83% on Friday, while the 30-year muni yield increased by one basis point to 2.80% from 2.79%, according to the final read of Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated on Monday at 95.8% compared to 97.7% on Friday, while the 30-year muni to Treasury ratio stood at 102.6% versus 104.3%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 34,934 trades on Monday on volume of $7.22 billion.
Primary Market
The biggest deal of the week is coming from Houston, Texas, as Loop Capital Markets will price the city’s $581.99 million of Series 2016A public improvement refunding bonds. The deal is rated Aa3 by Moody’s Investors Service and AA by Standard & Poor’s.
Since 2006, Houston has sold about $13.5 billion of debt. The biggest sale came in 2014 when the Space City sold $2.5 billion of bonds and the lowest issuance occurred in 2006 when the city issued $319 million of debt.
Also on Tuesday, Citi is expected to price the city and county of Denver, Colo.’s $353 million of tax revenue refunding bonds consisting of tax-exempt and taxables. The deal is rated Aa3 by Moody’s and AA-minus by S&P.
RBC Capital Markets is set to price the Board of Regents of the Texas A&M University System’s $325.75 million of Series 2016B taxable revenue financing bonds on Tuesday. The bonds are rated triple-A by Moody’s and expected to be rated AA-plus by S&P.
In the short-term competitive arena on Tuesday, the New York Metropolitan Transportation Authority is selling $700 million of bond anticipation notes in two separate sales. The MTA will offer $500 million of Series 2016 Subseries 2016A-1 due Oct. 1, and $200 million of Series 2016 Subseries 2016A-2 due Feb. 1, 2017. The BANs are rated MIG1 by Moody’s, SP1-plus by S&P and F1 by Fitch.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar fell $160.7 million to $9.05 billion on Tuesday. The total is comprised of $2.33 billion of competitive sales and $6.72 billion of negotiated deals.
