Trading activity ended with a more positive tone than it has had over the last few weeks offsetting some of the hesitation about the lack of supply heading into this week, according to market participants.

Despite the market being a little sidetracked with Treasuries being off, there was a more constructive nature overall to municipals than previous weeks, a New York trader at a Wall Street firm noted.

“The cheapness of municipals is starting to get recognized, and there is less forced selling,” he said.

Although about half of this week’s new $7 billion-plus supply was bolstered by the $3.2 billion New Jersey tobacco deal, which is considered a high-yield offering for a targeted group of sophisticated buyers, it helped set the tone for the market, he said.

“It doesn’t correlate to the general, national, high-grade market,” he said. “But, new issues are sort of an enigma -- investors are cautious about new issues at certain levels, but when the deals come they provide the price discovery and they embolden the market.”

“The market is a little skeptical and defensive as to how much more of that [cautiousness] will continue, but when new issues come you see the true nature of the demand,” he said.

If issuers provide maturities across the curve and underwriters price the bonds accordingly, the larger deals garner strong interest, he explained. “Buyers are there, but they are waiting for the deals to come out.”

Coming back to the tobacco deal, he said that even though most of it is single-A rated and the long end has triple-B ratings, it still helps the market. “It doesn’t really correlate to the higher grade market, but it does correlate to the psychology of the market,” he said. “It appears the levels will be do-able and the market for that will do fine.”

He added that “more supply would bring out more demand.”

Primary market
Jefferies priced the New Jersey Tobacco Settlement Financing Corp.’s Series 2018A senior and Series 2018B subordinate tobacco settlement bonds for retail investors ahead of the institutional pricing on Wednesday.

The $2.11 billion of senior bonds carried yields ranging from 2.13% with a 5% coupon in 2019 (rated A by S&P Global Ratings) to 4.125% with a 4% coupon in 2037 (rated A-minus by S&P).

The $1.11 billion of subordinate bonds, due in 2027 and 2046, were not reoffered to retail investors.

Siebert Cisneros Shank priced the New York City Municipal Water Finance Authority’s $426.14 million of Fiscal 2018 Series EE water and sewer system second resolution revenue bonds for retail investors on Tuesday ahead of the institutional pricing on Wednesday.

Citigroup issued a premarketing wire on Tuesday ahead of the pricing of the San Diego County Regional Transportation Commission’s $537.48 million of Series 2018A subordinate sales tax revenue short-term notes.

Wells Fargo Securities priced the Little Elm Independent School District, Texas' $133.67 million of unlimited tax school building bonds backed by the Permanent School Fund guarantee program.

In the competitive arena on Tuesday, Albany County, N.Y., sold $152 million of Series 2018 various purpose general obligation bonds.

Raymond James & Associates won the issue with a true interest cost of 2.468%.

The California Public Work Board sold $140 million of lease revenue and refunding bonds on Tuesday.

UBS Financial won the bonds with a TIC of 2.8262%.

Rhode Island sold over $149 million of general obligation bonds in two sales.

Morgan Stanley won the $114.28 million of tax-exempts with a TIC of 3.2579%. BOK Financial won the $35.1 million of taxables with a TIC of 3.0981%.

Since 2008, Rhode Island has issued about $1.85 billion of debt, with the most issuance occurring in 2014 when it sold $336.4 million. It offered the least amount of bonds in 2009, when it issued $54.6 million of debt.

Tuesday’s bond offerings

New Jersey:
Click here for Tobacco Settlement Financing Corp. retail deal

New York:
Click here for the NYC Water retail deal

Texas:
Click here for the Little Elm deal

California:
Click here for the San Diego premarketing wire

New York:
Click here for the Albany Co., N.Y., sale

Rhode Island:
Click here for the R.I. $114M sale

Click here for the R.I. $35M sale

NYC to sell $1.16B GOs next week
New York City will sell about $1.16 billion of general obligation bonds next week, comprised of around $914 million of tax-exempt fixed rate bonds and $250 million of taxable fixed rate bonds.

The tax-exempt fixed rate bonds are expected to be priced on Wednesday, April 11, via negotiated sale through the city’s underwriting syndicate, led by book-running senior manager Citigroup with Band of America Merrill Lynch, Goldman Sachs, JPMorgan Securities, Jefferies, Loop Capital Markets, Ramirez & Co., RBC Capital Markets and Siebert Cisneros Shank & Co., serving as co-senior managers. There will be a two-day retail order period beginning on Monday, April 9.

Proceeds from the sale will be used to fund capital projects, with the exception of proceeds from approximately $64 million of the tax-exempt fixed rate bonds, which will be used to convert certain outstanding floating rate bonds into fixed rate bonds.

Also on Wednesday, the city expected to competitively sell around $250 million of taxable fixed rate bonds.

Bond Buyer 30-day visible supply at $11.05B
The Bond Buyer's 30-day visible supply calendar decreased $605.7 million to $11.05 billion on Wednesday. The total is comprised of $2.823 billion of competitive sales and $8.225 billion of negotiated deals.

Previous session's activity
The Municipal Securities Rulemaking Board reported 42,230 trades on Monday on volume of $8.93 billion.

California, New York and Texas were the states with the most trades, with the Golden State taking 17.076% of the market, the Empire State taking 10.503% and the Lone Star State taking 9.479%.

Bond Buyer 30-day visible supply at $11.05B
The Bond Buyer's 30-day visible supply calendar decreased $605.7 million to $11.05 billion on Wednesday. The total is comprised of $2.823 billion of competitive sales and $8.225 billion of negotiated deals.

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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Christine Albano

Christine Albano

Christine Albano is a reporter in the Investor’s & Investing beat, which she has covered for the past two decades. She has a wide range of buy side sources in the municipal market.
Chip Barnett

Chip Barnett

Chip Barnett is a journalist with more than 40 years of experience. Barnett is currently Senior Market Reporter for The Bond Buyer.