Municipal bonds stage rally after Fed; N.Y. MTA sells bonds, BANs in primary

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The New York Metropolitan Transportation Authority sold over $1 billion of securities in four competitive sales on Thursday.

Municipals were stronger a day after the Federal Reserve left interest rates unchanged.

“Munis are broadly rallying today with yields down from three basis points to five basis points across the curve,” ICE Data Services said. “The muni market is following the Treasury rally that was sparked by yesterday’s Fed comments. The high-yield sector is two basis points lower in yield through 2029 and three basis points lower in the longer end. Tobaccos are following suit with yields two basis points lower across the curve. Taxable yields were as much as five basis points lower as the taxable market joins in the rally.”

While the secondary market seemed to have a dearth of supply, while there was a brisk appetite for new issues in the primary market, according to a Dallas trader.

"The market tone is very good today in reaction to the somewhat dovish comments from the Fed yesterday," he said on Thursday afternoon, adding that "secondary traders seem to be looking for paper."

Primary market
Bank of America Merrill Lynch won the N.Y. MTA’s $200 million of Series 2019A Subseries 2019A-1 transportation revenue climate bond certified green bonds with a true interest cost of 2.3199%.

BAML also won the $100 million of Series 2019A Subseries 2019A-3 transportation revenue climate bond certified green bonds with a TIC of 3.9358%.

JPMorgan Securities won the $162.805 million of Series 2019A Subseries 2019A-2 transportation revenue climate bond certified green bonds with a TIC of 4.297%.

The MTA’s $750 million of transportation revenue bond anticipation notes were won by 10 groups, including BAML, Barclays Capital, Citigroup, Goldman Sachs, Jefferies, JPMorgan, Morgan Stanley, TD Securities, UBS Financial and Williams Capital.

Moody's rates the bonds A1 and assigns a MIG1 rating to the BANs; S&P rates the bonds A and the BANs SP1; Fitch rates the bonds AA-minus and the BANs F1-plus and Kroll Bond Rating Agency assigns an AA-plus rating to the bonds and a K1-plus rating to the BANs. Assured Guaranty Municipal Corp. insured $100 million Subseries 2019A-3 2046 maturity and the $79.415 million Subseries 2019A-2 2044 maturity, which are rated AA by S&P.

In the negotiated sector, Siebert Cisneros Shank priced and repriced the Bexar County Hospital District, Texas’ $204.475 million of Series 2019 limited tax refunding bonds. The deal is rated Aa1 by Moody’s and AA-plus by Fitch.

The Dallas trader said the deal was oversubscribed and yields were lowered six basis points between 2021 and 2025 and in 2038 and 2039; three basis points between 2026 and 2028 and 2035 to 2037; and five basis points in 2034.

Jefferies priced the New York State Housing Finance Agency’s $134.39 million of Series 2019C affordable housing revenue refunding bonds. The deal is rated Aa2 by Moody’s

BAML priced Century Housing’s $100 million of corporate CUSIP taxable Series 2019 impact investment bonds. The deal is rated AA-minus by S&P.

BAML also priced as Republic Services Inc.’s $221.66 million of project quarterly remarketings. The deals are rated BBB-plus and A2 by S&P.

Thursday’s sales

New York
Click here for the $750M BANs sale

Click here for the $200M MTA sale

Click here for the $100M MTA sale

Click here for the $162.8M MTA sale

Click here for the state housing pricing

Texas
Click here for the Bexar repricing

Click here for the Bexar pricing

California
Click here for the Century Housing pricing

Click here for the Republic remarketings

Bond Buyer 30-day visible supply at $6.97B
The Bond Buyer's 30-day visible supply calendar increased $185.1 million to $6.97 billion for Thursday. The total is comprised of $2.44 billion of competitive sales and $4.53 billion of negotiated deals.

Secondary market
Municipal bonds were stronger Thursday, according to a late read of the MBIS benchmark scale. Benchmark muni yields fell as much as four basis points in the one- to 30-year maturities. High-grade munis were also stronger, with muni yields falling as much as three basis points across the curve.

Municipals were stronger on Municipal Market Data’s AAA benchmark scale, which showed the yield on the 10-year muni general obligation falling five basis points while the yield on 30-year muni maturity fell seven basis points.

Treasury bonds were weaker with the yield on the 30-year falling under 3%; stock prices were traded mixed.

On Thursday, the 10-year muni-to-Treasury ratio was calculated at 82.2% while the 30-year muni-to-Treasury ratio stood at 100.7%, 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 40,076 trades on Wednesday on volume of $13.75 billion.

California, Texas and New York were the municipalities with the most trades, with the Golden State taking 17.816% of the market, the Lone Star State taking 12.158% and the Empire State taking 10.108%.

Muni money market funds see third straight outflow
Tax-free municipal money market fund assets decreased $2.10 billion, lowering their total net assets to $142.49 billion in the week ended Jan. 28, according to the Money Fund Report, a service of iMoneyNet.com.0
The average seven-day simple yield for the 190 tax-free and municipal money-market funds nudged up to 0.91% from 0.90% last week.

Taxable money-fund assets lost $6.30 billion in the week ended Jan. 29, bringing total net assets to $2.864 trillion.

The average, seven-day simple yield for the 804 taxable reporting funds was unchanged from 2.04% last week.

Overall, the combined total net assets of the 994 reporting money funds decreased $8.40 billion to $3.007 trillion in the week ended Jan. 29.

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 Ziad Saba at 212-803-6079 for more information.

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Primary bond market Secondary bond market Municipal bond funds Metropolitan Transportation Authority State of New York County of Bexar, TX State of Texas State of California New York State Housing Finance Agency
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