Top quality municipal bonds were stronger at the close on Friday, according to traders, as yields on some maturities were as much as four basis points lower. Traders were looking ahead to an estimated $9.4 billion of new issuance in the coming week, which is made up of $7 billion of negotiated deals and $2.4 billion of competitive sales, according to Ipreo. That compares with a revised total of $3.63 billion in the past week, according to Thomson Reuters.
The largest deal on the schedule will hit the market on Tuesday, when Bank of America Merrill Lynch prices the Massachusetts School Building Authority's $714 million of senior dedicated sales tax refunding bonds, 2015 Series C. A retail order period is scheduled for Monday. The deal is rated Aa2 by Moody's Investors Service and AA-plus by both Standard and Poor's and Fitch Ratings.
The MSBA was created by the commonwealth of Massachusetts in 2004 to replace its former school building assistance program.
"Bondholders benefit from the statutory dedication of the tax for school capital purposes," Fitch said in a report. "Dedicated revenues are segregated from the Commonwealth general fund, and the Authority has no role in funding school operations. Strong legal covenants protect against diversion of revenues or lowering of the tax rate, although the base can be changed."
Barclays is scheduled to price the state of Connecticut's $650 million of general obligation bonds, Series F and G on Tuesday. The series F bonds are scheduled to be $585 million, while the series G are green bonds for $65 million. There is expected to be a retail order period on Monday. The deal is rated Aa3 by Moody's and AA by S&P, Fitch and Kroll Bond Rating Agency.
The green bond portion will provide funding for priority wastewater infrastructure projects statewide through Connecticut's clean water program. Projects include water pollution control for the Mattabassett District in Cromwell, the Metropolitan District Commission in Greater Hartford, and the Greater New Haven Water Pollution Control Authority.
It's Connecticut's third green bond sale. The state sold $60 million of green bonds as part of a $557 million sale in November 2014, and held an all-green $250 million sale in April that generated more than $73 million in orders from individual investors during a two-day retail period.
"The Connecticut Treasury's entry into this exciting, rapidly expanding marketplace demonstrates that government can play a role in supporting environmental sustainability," said state Treasurer Denise Nappier.
The biggest competitive sale of the week will come from the state if Wisconsin, which is selling- $225 million of transportation revenue bonds Tuesday.
Secondary Market
On Friday, the yield on the 10-year benchmark muni general obligation was two basis points lower at 2.17% from 2.19% on Thursday, while the 30-year was four basis points lower to 3.15% from 3.19%, according to a final read of Municipal Market Data's triple-A scale.
Treasuries were higher at Friday's close, as the two-year Treasury yield was down to 0.85% from 0.87% on Thursday, while the 10-year Treasury yield was lower at 2.27% from 2.32% and the 30-year yield dipped to 3.06% from 3.09% on Thursday.
The 10-year muni to Treasury ratio was calculated on Friday 95.3% versus 94.7% on Thursday, while the 30-year muni to Treasury ratio stood at 103.1% compared to 103.3%, according to MMD.
The Week's Most Actively Traded Issues
In the revenue bond sector, the Central Texas Regional Mobility Authority 5s of 2045 were traded 54 times. In the GO sector, the California 5s of 2045 were traded 26 times. And in the taxable bond sector, the California 7.55s of 2039 were traded 16 times, Markit said.
The Week's Most Actively Quoted Issues
Puerto Rico and California were some of the most actively quoted names in the week ended Nov. 13, according to data released by Markit.
On the bid side, the Commonwealth of Puerto Rico GO 5.125s of 2037 were quoted by 11 dealers. On the ask side, the California GO 5s of 2045 were quoted by 15 dealers. And among two-sided quotes, sales tax asset receivable corp. New York revenue 5s of 2029 were quoted by 21 dealers.
