Primary market ready to resurface as $3.3B scheduled
The municipal bond market is looking ahead to next week’s new issue slate that will be dominated by competitive sales from Massachusetts and taxable deals in the negotiated sector.
Ipreo estimates the weekly supply calendar at $3.30 billion, which is composed of $1.72 billion of negotiated deals and $1.58 billion of competitive sales.
Massachusetts is competitively selling $600 million of general obligation bonds in two separate sales on Tuesday. The sales consist of $400 million of consolidated loan of 2018 Series A GOs and $200 million of consolidated loan of 2018 Series B GOs. Both deals are rated Aa1 by Moody’s Investors Service, AA by S&P Global Ratings and AA-plus by Fitch Ratings.
In the negotiated sector, taxable bond deals dominate the slate.
Morgan Stanley is expected to price the Stanford Health Care’s $500 million of Series 2018 corporate CUSIP taxables on Wednesday. The deal is rated Aa3 by Moody’s, AA-minus by S&P and AA by Fitch.
RBC Capital Markets is expected to price the Pennsylvania Commonwealth Financing Authority’s $410 million of Series 2-018A taxable revenue bonds on Thursday. The deal is rated A1 by Moody’s, A by S&P and A-plus by Fitch.
And JPMorgan Securities is set to price the Illinois Finance Authority’s $218.67 million of Series 2018 taxable revenue refunding bonds for the Ann and Robert H. Lurie Children’s Hospital of Chicago. The deal is rated AA-minus by S&P and AA by Fitch.
On Friday, RBC priced the New Jersey Economic Development Authority’s $359.05 million of state lease revenue bonds for state government buildings. The issue consists of $196.25 million of Series 2018A Health Department and Taxation Division office projects bonds and $162.8 million of Series 2018C Juvenile Justice Commission facilities project bonds. The deal is rated Baa1 by Moody’s, BBB-plus by S&P and A-minus by Fitch and Kroll Bond Rating Agency.
RBC also priced the Socorro Independent School District, Texas’ $181.04 million of Series 2018 unlimited tax school building bonds and refunding bonds. The deal is backed by the Permanent School Fund guarantee program and rated triple-A by Moody’s and Fitch.
Bond Buyer 30-day visible supply at $6.92B
The Bond Buyer's 30-day visible supply calendar increased $1.73 billion to $6.92 billion on Friday. The total is comprised of $2.91 billion of competitive sales and $4.00 billion of negotiated deals.
N.Y. expects to sell $3.12B of bonds in Q1
New York State Comptroller Thomas DiNapoli announced on Friday that the state, New York City and their major public authorities will sell $3.12 billion of municipal bonds in the first quarter of the year.
The planned sales include $1.73 billion of new money and $1.39 billion of refundings or reofferings, with $2.7 billion scheduled for January of which $1.4 billion is new money and $1.3 billion is refundings or reofferings, and $425 million scheduled for March of which $335 million is new money and $90 million is refundings.
The anticipated sales in the first quarter compare to $8.02 billion in the fourth quarter of 2017 and $4.27 billion in the first quarter of 2017.
The following issuers are expected to sell bonds in the first quarter: the Dormitory Authority of the State of New York; the Metropolitan Transportation Authority; the New York State Energy Research & Development Authority; the Port Authority of New York & New Jersey; the State of New York, the State of New York Mortgage Agency; and the Triborough Bridge & Tunnel Authority.
The MBIS municipal non-callable 5% GO benchmark scale is weaker in midday trading.
The 10-year muni benchmark yield rose to 2.261% on Friday from the final read of 2.252% on Thursday, according to Municipal Bond Information Services. The MBIS 30-year benchmark muni yield increased to 2.744% from 2.737%.
The MBIS benchmark index is updated hourly on the Bond Buyer Data Workstation.
Top-rated municipal bonds are weaker at mid-session. The yield on the 10-year benchmark muni general obligation rose as much as two basis points from 1.99% on Thursday, while the 30-year GO yield gained as much as two basis points from 2.56% according to a read of MMD’s triple-A scale.
U.S. Treasuries are weaker in midday activity. The yield on the two-year Treasury rose to 1.97% on Friday from 1.96% on Thursday, the 10-year Treasury yield gained to 2.47% from 2.45% and the yield on the 30-year Treasury increased to 2.80% from 2.78%.
On Thursday, the 10-year muni-to-Treasury ratio was calculated at 81.3% compared with 81.0% on Wednesday, while the 30-year muni-to-Treasury ratio stood at 92.0% versus 91.2%, according to MMD.
MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 40,912 trades on Thursday on volume of $12.68 billion.
Lipper: Muni bond funds saw outflows
Investors in municipal bond funds again pulled cash out of the funds in the latest week, according to Lipper data released on Thursday.
The weekly reporters saw $47.880 million of outflows in the week of Jan. 3, after outflows of $180.177 million in the previous week.
Exchange traded funds reported inflows of $195.493 million, after outflows of $15.570 million in the previous week. Ex-ETFs, muni funds saw $243.373 million of outflows, after outflows of $164.606 million in the previous week.
The four-week moving average was positive at $59.882 million, after being negative $129.949 million in the previous week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds had inflows of $255.775 million in the latest week after inflows of $122.015 million in the previous week. Intermediate-term funds had inflows of $8.637 million after inflows of $43.649 million in the prior week.
National funds had inflows of $138.051 million after inflows of $37.812 million in the previous week.
High-yield muni funds reported inflows of $73.675 million in the latest week, after inflows of $225.414 million the previous week.
Week's actively traded issues
Some of the most actively traded bonds by type in the week ended Jan. 5 were from New York and Illinois issuers, according to Markit.
In the GO bond sector, the New York City zeroes of 2042 were traded 31 times. In the revenue bond sector, the New York City Municipal Water Finance Authority zeroes of 2050 were traded 24 times. And in the taxable bond sector, the Illinois 5.1s of 2033 were traded 12 times.
Week's actively quoted issues
Puerto Rico, Chicago and Illinois names were among the most actively quoted bonds in the week ended Jan. 5, according to Markit.
On the bid side, Puerto Rico Commonwealth GO 5s of 2041 were quoted by 56 unique dealers. On the ask side, the Chicago taxable 5.432s of 2042 were quoted by 190 dealers. And among two-sided quotes, Illinois taxable 5.1s of 2033 were quoted by 23 unique dealers.
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.