Municipal bonds held firm ahead of the week’s $7.5 billion supply slate, dominated by the state of California's $2.2 billion taxable offering, which is expected to lure some international investors.

Secondary market
Municipal bonds were mixed on Monday, according to a late read of the MBIS benchmark scale.

Benchmark muni yields rose less than a basis point from one to seven years and from 15 to 30 years, while yields from eight to 14 years fell less than a basis point.

Yields calculated on MBIS’ AAA scale rose less than a basis point from one to eight years while yields on maturities from nine to 30 years fell less than one basis point.

Primary market
The POS for California's taxable sale contains a section entitled “notice to prospective investors outside of the United States,” an indication the deal is expected to attract a substantial number of foreign buyers.

JPMorgan Securities is expected to price the California taxables for institutions on Tuesday. The Golden State’s GOs are rated Aa3 by Moody’s Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.

This week’s calendar is composed of $5.59 billion of negotiated deals and $1.86 billion of competitive sales.

Bank of America Merrill Lynch is expected to price the Montgomery County Higher Education and Health Authority, Pa.’s $485 million of revenue bonds, taxable revenue bonds and variable-rate bonds on Tuesday. The deal is rated A2 by Moody’s and A-plus by S&P.

Goldman Sachs is set to price the District of Columbia Water and Sewer Authority’s $300 million of Series 2018A senior lien revenue green bonds on Tuesday. The deal is rated Aa1 by Moody’s and AAA by S&P.

In the competitive arena on Tuesday, Memphis, Tenn., is selling $315 million of Series 2018 general obligation improvement bonds. The deal is rated Aa2 by Moody’s and AA by S&P.

Also Tuesday, the Virginia Public Buildings Authority is selling $179.91 million of public facilities revenue bonds in two sales consisting of $162.24 million of Series 2018A tax-exempts and $17.67 million of Series 2018B taxables. Both deals are rated AA-plus by Fitch.

Prior week's top underwriters
The top municipal bond underwriters of last week included Citigroup, RBC Capital Markets, Wells Fargo Securities, JPMorgan Securities and Crews & Associates, according to Thomson Reuters data.

In the week of April 8 to April 14, Citi underwrote $1.03 billion, RBC $898.7 million, Wells Fargo $625.6 million, JPMorgan $522.7 million and Crews $195.0 million.

The kindest month: Munis doing well in April
With all the equity turmoil so far this month, April has turned into a pretty decent month for the municipal bond market, according to a research report released Monday by Bank of America Merrill Lynch.

The U.S. Municipal Securities Index returned a positive 0.045% month-to-date, according to BAML.

Sophie Yan, BAML municipal research strategist, said that the ICE BAML U.S. Municipal Securities Index returned negative 1.101% for the year to date through April 12, outperforming both the ICE BAML Treasury Master Index and the ICE BAML U.S. Corporate Index which had with total returns of negative 1.586% and negative 2.294%, respectively.

The best performance in munis year-to-date has been in the one- to three-year maturities and the BBB-rated sector.

Issuance so far this year totals $77.2 billion, down 27.2% from the same period in 2018. Of the total issuance year-to-date, 28.3% has been related to refundings, compared with 52.9% during the same period last year.

Previous session's activity
The Municipal Securities Rulemaking Board reported 32,802 trades on Friday on volume of $10.04 billion.

California, New York and Texas were the states with the most trades, with the Golden State taking 16.183% of the market, the Empire State taking 12.993% and the Lone Star State taking 10.60%.

Prior week's actively traded issues
Revenue bonds comprised 56.89% of new issuance in the week ended April 13, down from 57.27% in the previous week, according to Markit. General obligation bonds made up 37.82% of total issuance, up from 37.21%, while taxable bonds accounted for 5.29%, down from 5.52% a week earlier.

Some of the most actively traded bonds by type in the week were from New York, New Jersey and Illinois issuers.

In the GO bond sector, the New York City 3.375s of 2038 traded 80 times. In the revenue bond sector, the N.J. Tobacco Settlement Financing Corp. 5s of 2046 traded 41 times. And in the taxable bond sector, the Illinois 5.1s of 2033 traded 12 times.

Treasury sells discount bills
Tender rates for the Treasury Department's $48 billion of 91-day and $42 billion of 182-day discount bills were higher, as the three-months incurred a 1.760% high rate, up from 1.715% the prior week, and the six-months incurred a 1.945% high rate, up from 1.880% the week before.

Coupon equivalents were 1.792% and 1.992%, respectively. The price for the 91s was 99.555111 and that for the 182s was 99.016694.

The median bid on the 91s was 1.740%. The low bid was 1.700%. Tenders at the high rate were allotted 80.34%. The bid-to-cover ratio was 3.13.

The median bid for the 182s was 1.920%. The low bid was 1.890%. Tenders at the high rate were allotted 69.02%. The bid-to-cover ratio was 3.12.

Treasury to sell $45B 4-week bills
The Treasury Department said it will sell $45 billion of four-week discount bills Tuesday. There are currently $84.000 billion of four-week bills outstanding.

Gary Siegel contributed to this report.

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.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.