Municipal bond traders are set for some of the week’s biggest deals to come to market on Tuesday, led by issuers in the Golden and Lone Star states.
Secondary Market
U.S. Treasuries were narrowly mixed in morning trade. The yield on the two-year Treasury increased to 0.75% from 0.74% on Monday, while the 10-year Treasury yield was unchanged from 1.77% and the yield on the 30-year Treasury bond was flat at 2.59%.
Top-rated municipal bonds finished steady to stronger on Monday. The yield on the 10-year benchmark muni general obligation fell one basis point to 1.60% from 1.61% on Friday, while the 30-year muni yield was unchanged from 2.54%, according to the final read of the Municipal Market Data's triple-A scale.
The 10-year muni to Treasury ratio was calculated at 90.4% on Monday compared with 92.0% on Friday, while the 30-year muni to Treasury ratio stood at 98.3% versus 99.2%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 32,700 trades on Monday on volume of $6.66 billion.
Primary Market
On Tuesday, the state of California will sell three separate competitive sales totaling nearly $1.5 billion.
The largest of the trio will be $645.3 million of tax-exempt various purpose general obligation refunding bonds, followed by $606.7 million of tax-exempt various purpose GO refunding bonds and $236.8 million of taxable various purpose GO bonds.
All three sales are rated Aa3 by Moody’s Investors Service, AA-minus by Standard & Poor’s and A-plus by Fitch Ratings.
Also in the competitive arena, Fort Lauderdale, Fla., will sell $165.94 million of Series 2016 water and sewer revenue and revenue refunding bonds. The deal is rated Aa1 by Moody’s and AA-plus by S&P.
The city last competitively sold comparable bonds was on Nov. 18, 2014, when Bank of America Merrill Lynch won $121.52 million of Series 2014 water and sewer revenue refunding bonds with a true interest cost of 3.18%.
In the negotiated sector, Bank of America Merrill Lynch is expected to price the Texas Transportation Commission’s $615 million of Series 2016 state highway improvement GOs on Tuesday.
The deal is rated triple-A by Moody’s, S&P and Fitch and is the largest deal so far this year in the Lone Star State.
Proceeds will go toward capital projects, particularly those designed to relieve congestion in major urban areas.
Since 2006, the commission has sold about $28 billion of bonds with the most issuance occurring in 2014 when it sold $5.5 billion. The TTC did not come to market in 2011 or 2013.
Stifel is expected to price on Tuesday $224.12 million of multipurpose bonds for Carmel, Ind.’s Local Public Improvement Bond Bank. The deal is rated AA-plus by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $1.67 billion to $12.83 billion on Tuesday. The total is comprised of $5.85 billion of competitive sales and $6.98 billion of negotiated deals.
