Municipal bonds held firm at mid-session as traders get set to see some much-anticipated supply hit the screens this week.

Quiet and lackluster activity in the morning was seen as the absence of supply continued to plague investors who have July redemptions.

“It’s very quiet with the summer doldrums and a light calendar,” a New Jersey trader lamented on Monday. He described last week as “brutal” with the July 4 holiday in the middle of the week and said this week’s activity isn’t much better.

“The secondary market is not retail friendly,” he said. “Because of the lack of supply, to part with bonds the buyside accounts are putting out high offerings and people tend to [hold onto] what they own because it’s so hard to replace.”

Due to the July redemptions, demand continues to be significantly higher than the volume of bonds coming into the market, he observed. “The Street activity is very quiet and it continues to be all about the new issues,” he said. “It’s a great time to bring a deal right now.”

He predicted that the upcoming weeks and months will be similarly scarce, unless volume dramatically increases.

“I don’t see any end in sight to this. It would take an awful lot of negative news to have any effect on the municipal market right now,” he added, pointing to a the presence of a substantial calendar or some kind of forced selling. “I’ve been doing this for 30 years and right now I don’t see anything out there right now indicates any forced selling.”

Primary market
Weekly supply is estimated at $6.6 billion, consisting of $5.5 billion of negotiated deals and $1.2 billion of competitive sales.

In the competitive arena, the Massachusetts School Building Authority is selling $200 million of Series 2018B subordinated dedicated sales tax revenue bonds on Tuesday. The financial advisor is Acacia Financial Group; the bound counsel is Mintz Levin.

In the short-term competitive sector, Colorado is selling over $900 million of notes in two separate offerings. The state will also sell $310 million of Series 2018A education loan program TRANS on Tuesday; the financial advisor is Kutak Rock and the bond counsel is RBC Capital Markets. The state will sell $600 million of Series 2018 general fund tax and revenue anticipation notes on Thursday; the financial advisor is North Slope Capital Advisors and bond counsel is Greenberg Traurig.

On Wednesday, the Dormitory Authority of New York is selling $1.81 billion of state sales tax bonds in five deals.

The offerings consist of $497.04 million of Series 2018C Bidding Group 4 bonds; $450.44 million of Series 2018C Bidding Group 3 bonds; $408.63 million of Series 2018C Bidding Group 2 bonds; $377.02 million of Series 2018C Bidding Group 1 bonds; and $73.195 million of Series 2018D taxable bonds. The financial advisor is Public Resources.

Also on Wednesday, the Metropolitan Atlanta Rapid Transit Authority is selling $168.25 million of Series 2018A sales tax revenue bonds. Financial advisors are Hilltop Securities, First Tryon Advisors and TKG & Associates; the bond counsel is Holland & Knight.

In the negotiated sector, Citigroup is set to price Atlanta’s $279 million of Series 2018B water and wastewater revenue and refunding bonds on Tuesday.

Citi is also set to price the Mesquite Independent School District, Texas’ $125 million of Series 2018 unlimited tax school building bonds, backed by the Permanent School Fund guarantee program.

On Wednesday, Morgan Stanley is set to price the Maine Health and Higher Educational Facilities Authority’s $183.87 million of revenue bonds. The issue consists of Series 2018A tax-exempts and Series 2018B taxables.

NYC set for sales
New York City issuers will bring a full calendar of offerings in July.

The New York City Transitional Finance Authority plans to offer $1 billion of fixed rate tax-exempt new money and refunding building aid revenue bonds the week of July 16 via negotiated sale, with a small taxable portion of the BARBs being sold via competitive bid.

The New York City Municipal Water Finance Authority also expects to offer $355 million of fixed rate tax-exempt bonds through the Environmental Facilities Corp. via negotiated sale the week of July 16.

And in the week of July 23, the New York City Transitional Finance Authority plans to offer $1.1 billion of fixed rate tax-exempt and taxable future tax secured bonds via negotiated and competitive sales.

Bond Buyer 30-day visible supply at $10.75B
The Bond Buyer's 30-day visible supply calendar increased $2.72 billion to $10.75 billion on Monday. The total is comprised of $4.68 billion of competitive sales and $6.07 billion of negotiated deals.

Secondary market
Municipal bonds were stronger on Monday, according to a midday read of the MBIS benchmark scale. Benchmark muni yields fell as much as one basis point in the one- to eight-year and 12- to 30-year maturities, rose less than a basis point in the 10-year maturity and were unchanged in the nine- and 11-year maturities.

High-grade munis were mixed, with yields calculated on MBIS’ AAA scale falling as much as one basis point in the one- to eight-year and 14- to 30-year maturities, rising less than a basis point in the nine- to 12-year maturities and remaining unchanged in the 13-year maturity.

Municipals were unchanged on Municipal Market Data’s AAA benchmark scale, which showed both the 10-year muni general obligation yield and the 30-year muni maturity yield steady.

Treasury bonds were stronger as stocks traded higher.

On Friday, the 10-year muni-to-Treasury ratio was calculated at 86.0% while the 30-year muni-to-Treasury ratio stood at 98.7%, according to MMD. The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasury with comparable maturities. If the muni/Treasury ratio is above 100%, munis are yielding more than Treasury; if it is below 100%, munis are yielding less.

Previous session's activity
The Municipal Securities Rulemaking Board reported 27,112 trades on Friday on volume of $4.997 billion.

California, New York and Texas were the states with the most trades, with the Golden State taking 14.031% of the market, the Empire State taking 13.038% and the Lone Star State taking 11.446%.

Prior week's actively traded issues
Revenue bonds comprised 54.42% of new issuance in the week ended July 6, down from 54.68% in the previous week, according to Markit. General obligation bonds made up 39.98% of total issuance, down from 40.01%, while taxable bonds accounted for 5.60%, up from 5.31% a week earlier.

Some of the most actively traded munis by type were from Puerto Rico and West Virginia issuers.

In the GO bond sector, the Puerto Rico Commonwealth 8s of 2035 traded 17 times. In the revenue bond sector, the West Virginia Hospital Finance Authority 4s of 2051 traded 115 times. And in the taxable bond sector, the Puerto Rico Sales Tax Financing Corp. 6.05s of 2036 traded 21 times.

Treasury to sell $35B 4-week bills
The Treasury department said on Monday that it will sell $35 billion of four-week bills on Tuesday.

The bills are due Aug. 2 and are a reopening of an auction in February.

Treasury auctions discount bills
The Treasury on Monday sold $48 billion of 91-day bills at a 1.945% high rate and $42 billion of 182-day bills at a 2.10% high rate.

For the 91s, the coupon equivalent was 1.982% while the bid-to-cover ratio was 2.85%. The media rate was 1.92% and the low rate was 1.90%. The bills are due on Oct. 11.

For the 181s, the coupon equivalent was 2.152% while the bid-to-cover ratio was 2.78%. The media rate was 2.07% and the low rate was 2.03%. The bills are due on Jan. 10, 2019.

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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