Municipal bond traders are awaiting the next raft of issuance to come to market on Wednesday, led by issues from California and Maryland.
Secondary Market
U.S. Treasuries were weaker on Wednesday. The yield on the two-year Treasury rose to 1.24% from 1.19% on Tuesday, while the 10-year Treasury yield gained to 2.50% from 2.47%, and the yield on the 30-year Treasury bond increased to 3.08% from 3.05%.
Top-rated municipal bonds finished steady on Tuesday. The 10-year benchmark muni general obligation yield was flat from 2.32% on Monday, while the yield on the 30-year GO was steady from 3.05%, according to the final read of Municipal Market Data's triple-A scale.
On Tuesday, the 10-year muni to Treasury ratio was calculated at 94.0% on Tuesday compared to 96.6% on Monday, while the 30-year muni to Treasury ratio stood at 99.8%, versus 102.0%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 45,491 trades on Tuesday on volume of $9.30 billion.
Primary Market
On Wednesday, the Los Angeles County Metropolitan Transportation Authority, Calif., is competitively selling $455.71 million of Series 2017A Proposition C sales tax revenue bonds.
The deal is rated Aa2 by Moody's Investors Service and AA-plus by S&P Global Ratings.
Since 2008, the L.A. MTA authority has issued about $5.05 billion of debt, with the largest issuance occurring in 2009 when it sold roughly $1.1 billion of debt. The authority saw a low year of issuance in 2015, when it sold $91.3 million.
In the negotiated sector on Wednesday, Citigroup is expected to price the Mayor and City Council of Baltimore's $486 million of Series 2017A-C revenue bonds for water and wastewater projects for retail investors. The deal is rated Aa2 by Moody's and AA by S&P.
Jefferies is expected to price the Texas Public Finance Authority's $275 million of Series 2017 taxable GO and refunding bonds.
Bank of America Merrill Lynch is expected to price the San Francisco Bay Area Toll Authority, Calif.'s $450 million of Series 2017 F-1 revenue bonds and Series 2017 S-7 subordinate bonds on Thursday. The deal is rated Aa3 by Moody's and AA by S&P and Fitch Ratings.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar decreased $1.89 billion to $8.99 billion on Wednesday. The total is comprised of $1.77 billion of competitive sales and $7.21 billion of negotiated deals.
Siebert Sees Supply, Technicals Improving This Week
"The strong tone in the market that was present throughout January came to an abrupt and somewhat enigmatic end last week," according to a Siebert Cisneros Shank market comment on Tuesday. "Rich percentages of municipal yields versus U.S. Treasuries as well as numerous customer bid lists were the largest contributors of this trade-off, but market participants were still unsure of the full reasoning for the selloff. Municipals underperformed their U.S. Treasury counterparts up and down the yield curve."
SCS saw some more positive signs going forward.
"Supply this week [the week of Jan. 23] is very manageable and technical[s] will become more positive going forward due to bonds maturing and other redemptions," SCS wrote.
