Municipal bond traders are preparing for a jump of almost $6 billion in weekly issuance, with many larger deals than we have seen in a few weeks.
Yields were on the rise last week, but closed trending downward on Friday by as many as four basis points.
Secondary Market
Treasuries were higher on Monday morning, as the two-year Treasury yield was down to 0.83% from 0.85% on Friday, while the 10-year Treasury yield was lower at 2.26% from 2.27% and the 30-year yield dipped to 3.05% from 3.06% on Friday.
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 the final read of Municipal Market Data's triple-A scale.
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.
Primary Market
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 Series 2015C $714 million of senior dedicated sales tax refunding bonds. 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 Series F and G general obligation bonds on Tuesday. The Series F bonds are scheduled to be $585 million, while the Series G are green bonds for $65 million. A retail order period is expected 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.
RBC Capital Markets is expected to price the New Jersey Transportation Trust Fund Authority's $626.8 million of Series 2015 AA transportation program bonds on Tuesday. The deal is rated A3 by Moody's and A-minus by both S&P and Fitch.
Ramirez and Co. is scheduled to price the New York City Municipal Water Finance Authority's $338.63 million of water and sewer system second general resolution revenue bonds on Tuesday, which will consist of three series.
The Previous Week's Actively Traded Sectors
Revenue bonds comprised 55.54% of new issuance in the week ended Nov. 13, up from 55.25% in the previous week, according to Markit. General obligation bonds comprised 37.11% of total issuance, up from 37.05%, while taxable bonds made up 7.35%, down from 7.70%.
Some of the most actively traded issues in the week were in Texas and California.
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.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 32,634 trades on Friday on volume of $6.95 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $441 million to $11.9 billion on Monday. The total is comprised of $3.5 billion competitive sales and $8.4 billion of negotiated deals.
