Powell speaks, munis listen and wait for clues on rates
Municipal bonds were holding firm as new Federal Reserve Board Chair Jerome Powell’s testimony before Congress was perceived by market participants to be closely adhering to the status quo.
Responding to questions from the House Financial Services Committee, Powell refused to comment about the number of times the Federal Open Market Committee might raise rates this year, although he noted that his view of the economic outlook for the U.S. was stronger following tax reform and the budget deal.
Volume is estimated by Ipreo at $4.76 billion, comprised of $3.12 billion of negotiated deals and $1.64 billion of competitive sales.
On Tuesday, Barclays Capital premarketed the Los Angeles Department of Airports $375.88 million of Series 2018A subordinate revenue bonds subject to the alternative minimum tax for the Los Angeles International Airport.
The deal was being premarketed at spreads of 11 basis points to 49 basis points over the MMD scale and 50 basis points over the MMD in 2043 and 85 basis points and 42 basis points over the MMD in a split 2048 maturity.
The deal is slated to be priced on Wednesday.
The issue is rated A1 by Moody’s Investors Service and AA-minus by S&P Ratings and Fitch Ratings. All three assign a stable outlook to the bonds.
Since 2008, the airport department has issued about $6 billion of bonds, with the most issuance occurring in 2010 when it sold $2 billion of bonds. The department did not come to market in 2011, 2012 or 2014.
This week, Baltimore County, Md., will competitively sell about $837 million of bonds and notes in four offerings.
On Wednesday, the county will sell $225 million of general obligation metropolitan district bonds, 80th issue, and $121 million of 2018 GO consolidated public improvement bonds. On Thursday, the county will sell $246 million of Series 2018 consolidated public improvement general obligation bond anticipation notes and $245 million of Series 2018 metropolitan district general bond anticipation notes.
On Wednesday, Wisconsin will competitively sell $286.84 million of Series 2018A GOs
Also this week, Goldman Sachs will price Alabama’s Black Belt Energy Gas District’s $653 million of gas prepay revenue bonds for Project No. 3.
RBC Capital Markets will price the New York State Thruway Authority’s $600 million of Series L general revenue refunding bonds. The deal is slated to be priced on Thursday.
And Bank of America Merrill Lynch is set to price Houston, Texas’ $417 million of airport system subordinate lien revenue and refunding bonds consisting of Series 2918A bonds subject to the alternative minimum tax and Series 2018B non-AMT bonds. The deal is slated to be priced on Thursday.
Bond Buyer 30-day visible supply at $10.48B
The Bond Buyer's 30-day visible supply calendar increased $2.23 billion to $10.48 billion on Tuesday. The total is comprised of $3.61 billion of competitive sales and $6.86 billion of negotiated deals.
Previous session's activity
The Municipal Securities Rulemaking Board reported 41,359 trades on Monday on volume of $7.87 billion.
California, Texas and New York were the states with the most trades, with the Golden State taking 15.799% of the market, the Empire State taking 13.339% and the Lone Star State taking 10.749%.
Treasury sells one-year and 4-week bills
The Treasury Department on Tuesday auctioned $22 billion of 364-day bills at a 2.020% high yield, a price of 97.957556. The coupon equivalent was 2.080%. The bid-to-cover ratio was 3.00. Tenders at the high rate were allotted 96.77%. The median yield was 1.990%. The low yield was 1.960%.
Treasury also auctioned $60 billion of four-week bills at a 1.495% high yield, a price of 99.883722. The coupon equivalent was 1.518%. The bid-to-cover ratio was 2.80. Tenders at the high rate were allotted 20.24%. The median rate was 1.440%. The low rate was 1.400%.
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.