Bond yields at a glance
MBIS benchmark (~AA)
2.46 (-7-9 bps)
3.01 (-7-9 bps)
MBIS indices are updated hourly on the Bond Buyer Data Workstation.
Municipal bond buyers are waiting in the wings for trading volatility to die down before jumping back into the market, with some traders describing an apathetic mood on Tuesday.
“We aren’t seeing the follow-through from the buyers at these levels where the scale is setting prices high and yields lower,” said a New Jersey trader. “Treasuries sold off [on Monday] and municipal ratios, as a result, have lowered as well and made munis less attractive."
The MBIS municipal non-callable 5% GO benchmark scale and the MBIS AAA scale were both stronger Tuesday. Ron Valinoti, founder of Triangle Park Capital Markets Data and manager of business operations for MBIS Brokerage partners, said he thought it had captured the correct tone of the market on Monday.
"We saw the curve move on Monday along with Treasuries," he said, adding this was validated by a good deal of market activity.
On Tuesday, the 10-year MBIS muni benchmark yield fell to 2.620% from the final read of 2.651% on Monday, according to Municipal Bond Information Services. The MBIS 30-year benchmark muni yield dropped to 3.079% from 3.118%. The 10-year MBIS muni AAA yield decreased to 2.512% on Tuesday from the final read of 2.533% on Monday, according to Municipal Bond Information Services. The MBIS 30-year AAA muni yield fell to 2.973% from 3.005%. The MBIS benchmark index is updated hourly on the Bond Buyer Data Workstation.
Top-rated municipal bonds on the MMD scale were substantially stronger.
“Munis essentially sat out Monday’s Treasury rally while stocks melted down. They are playing catch-up [Tuesday] which is typical because muni trading doesn’t often apply the brakes and reverse course that fast,” said Greg Saulnier, research analyst at Municipal Market Data. “In fact, we were still noticing some muni drift around midday [on Monday] despite Treasuries maintaining gains. Now that they have appreciated even further, muni buyers are engaged again.”
The yield on the 10-year benchmark muni general obligation fell seven to nine basis points from 2.46% on Monday, while the 30-year GO yield fell seven to nine basis points from 3.01%, according to a read of MMD’s triple-A scale.
U.S. Treasuries were mixed on Tuesday. The 10-year Treasury yield was unchanged from 2.75% while the yield on the 30-year Treasury gained to 3.04% from 3.03%.
Stock prices vacillated between gains and losses.
Previous session's activity
On Monday, the 10-year muni-to-Treasury ratio was calculated at 88.0% compared with 86.5% on Friday, while the 30-year muni-to-Treasury ratio stood at 98.1% versus 97.2%, according to MMD.
The Municipal Securities Rulemaking Board reported 38,781 trades on Monday on volume of $7.46 billion.
California, Texas and New York were the three states with the most trades on Thursday, with the Golden State taking 15.108% of the market, Lone Star State taking 14.227% and the Empire State taking 9.285%.
Citigroup is set to price Houston’s $134 million of airport system special facilities revenue bonds on Tuesday.
The deal is rated BB-minus by S&P Global Ratings .
Since 2008, the city has issued about $14 billion of bonds, with the most issuance occurring in 2014 when it sold $2.52 billion. It sold the least amount of bonds in 2015 when it issued $485.1 million.
Morgan Stanley is expected to price for retail the Los Angeles Department of Water and Power’s $231 million of series 2018A water system revenue bonds.
The bonds, which are rated Aa2 by Moody’s Investors Service, AA-plus by S&P and AA by Fitch Ratings, will be priced for institutions on Wednesday.
Citi priced Delaware’s $213.4 million of Series 2018A general obligation bonds.
The issue was priced as 5s to yield from 1.67% in 2021 to 2.90% in 2038.
The deal is rated triple-A by Moody’s, S&P and Fitch.
In the competitive arena, Fort Lauderdale, Fla., sold $180.08 million of Series 2018 water and sewer revenue bonds.
Citigroup won the bonds with a true interest cost of 3.7617%. The issue was priced as 4s to yield 3.37% in 2037, 3.40% in 2038, 3.48% in 2040, 3.49% in 2041, 3.51% in 2043%, 3.55% in 2047 as 3 1/2s to yield 3.60% in 2048.
The deal is rated Aa1 by Moody’s and AA-plus by S&P.
In the short-term competitive sector, Richland County, S.C., sold $250 million of transportation sales and use tax general obligation bond anticipation notes.
Wells Fargo Securities won the BANs and priced them at 101.573 with a 3% coupon to yield 1.40%.
The BANs are rated at MIG1 by Moody’s and SP1-plus by S&P.
Bond Buyer 30-day visible supply at $6.03B
The Bond Buyer's 30-day visible supply calendar decreased $42.7 million to $6.03 billion on Tuesday. The total is comprised of $1.64 billion of competitive sales and $4.39 billion of negotiated deals.
Treasury auctions bills
The Treasury Department Tuesday auctioned $15 billion of four-week bills at a 1.480% high yield, a price of 99.884889. The coupon equivalent was 1.502%. The bid-to-cover ratio was 3.16. Tenders at the high rate were allotted 46.82%. The median rate was 1.430%. The low rate was 1.370%.
Treasury also sold $30 billion 70-day cash management bills, dated Feb. 8, due April 19, at a 1.440% high tender rate. The bid to cover ratio was 3.80. The coupon equivalent was 1.464%. The price was 99.720000. The low bid was 1.400%. The median bid was 1.430%. Tenders at the high were allotted 84.57%.
Gary Siegel contributed to this report.
Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Vanessa Kim at 212-803-8474 for more information.
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Corrected February 6, 2018 at 3:54PM: Corrects MMD scale read