Munis strengthen ahead of small slate
Municipal bonds were stronger on Monday ahead of this week’s rather paltry new issue supply calendar.
About $5.9 billion of volume is forecast for the week, with a slate composed of $4 billion of negotiated deals and $1.9 billion of competitive sales.
JPMorgan Securities is set to price the Tarrant County Cultural Educational Facilities Finance Corp., Texas’ $447.32 million of Series 2018AB revenue and refunding bonds for Christus Health on Tuesday.
Also on Tuesday, JPMorgan is set to price for Christus Health a $339.02 million taxable corporate CUSIP deal.
The deals are rated A1 by Moody’s Investors Service and A-plus by S&P Global Ratings.
Citigroup is expected to price the Hillsborough County Aviation Authority, Fla.’s $402 million of revenue bonds for the Tampa International Airport.
The deal consists of Series 2018E bonds subject to the alternative minimum tax and Series 2018F non-AMT bonds, rated Aa3 by Moody’s, AA-minus by S&P and Fitch Ratings and AA by Kroll Bond Rating Agency; and Series 2018 subordinate bonds, rated A1 by Moody’s, A-plus by S&P and Fitch and AA-minus by Kroll.
In the competitive arena on Tuesday, Clark County, Nev., will sell $450 million of general obligation bonds in two sales consisting of $300 million of Series 2018B limited tax transportation improvement bonds and $150 million of Series 2018 limited tax park improvement bonds additionally secured by pledged revenues.
The financial advisors are Hobbs, Ong & Associates and PFM Financial Advisors; the bond counsel is Sherman & Howard.
Proceeds of the 2018B bonds will be used to finance a portion of the costs of certain improvements to transportation facilities within the Strip Resort Corridor; proceeds of the 2018 bonds will be used to finance certain park projects.
The deals are rated Aa1 by Moody’s and AA-plus by S&P.
Ohio will sell $162 million of Series 2018A GO infrastructure improvement bonds on Tuesday.
Proceeds will be used to financing the cost of public infrastructure capital improvement projects of local subdivisions in the state. The financial advisor is PFM Financial Advisors; the bond counsel are Roetzel & Andress and Squire Sanders.
The deal is rated Aa1 by Moody’s and AA-plus by S&P and Fitch.
Prior week's top underwriters
The top municipal bond underwriters of last week included Bank of America Merrill Lynch, Ramirez & Co., Raymond James & Associates, Goldman Sachs and Wells Fargo Securities, according to Thomson Reuters data.
In the week of Oct. 14 to Oct. 20, BAML underwrote $2.5 billion, Ramirez $1.3 billion, Raymond James $1.1 billion, Goldman $850.6 million and Wells Fargo $759.1 million.
Bond Buyer 30-day visible supply at $7.7B
The Bond Buyer's 30-day visible supply calendar increased $360.1 million to $7.70 billion for Monday. The total is comprised of $2.81 billion of competitive sales and $4.87 billion of negotiated deals.
Municipal bonds were stronger on Monday, according to a read of the MBIS benchmark scale. Benchmark muni yields fell less than one basis point in the one- to 30-year maturities.
High-grade munis were also stronger, with yields calculated on MBIS' AAA scale falling as much as one basis point across the curve.
Municipals were stronger on Municipal Market Data’s AAA benchmark scale, which showed the yield on both the 10-year muni general obligation and the yield on 30-year muni maturity falling as much as one basis point.
Treasury bonds were weaker as stocks traded higher.
On Friday, the 10-year muni-to-Treasury ratio was calculated at 85.6% while the 30-year muni-to-Treasury ratio stood at 100.9%, 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.
Prior week's top FAs
The top municipal financial advisors of last week included Public Resources Advisory Group, PFM Financial Advisors, Hilltop Securities, Raymond James and Acacia Financial Group, according to Thomson Reuters data.
In the week of Oct. 14 to Oct. 20, PRAG advised on $2.6 billion, PFM $1.9 billion, Hilltop $1.6 billion, Raymond James $827.5 million and Acacia $706.9 million.
Previous session's activity
The Municipal Securities Rulemaking Board reported 35,006 trades on Friday on volume of $10.19 billion.
New York, California and Texas were the municipalities with the most trades, with the Empire State taking 15.616% of the market, the Golden State taking 13.207%, and the Lone Star State taking 11.588%.
Prior week's actively traded issues
Revenue bonds comprised 57.70% of total new issuance in the week ended Oct. 19, up from 56.97% in the prior week, according to Markit. General obligation bonds made up 37.44%, down from 37.83% while taxable bonds accounted for 4.86%, down from 5.20%.
Some of the most actively traded munis by type in the week were from New York, Utah and Puerto Rico issuers.
In the GO bond sector, the New York City zeros of 2042 traded 24 times. In the revenue bond sector, the Salt Lake City Airport 5s of 2048 traded 64 times. And in the taxable bond sector, the Puerto Rico Government Development Bank 5s of 2023 traded 11 times.
Treasury to sell $40B 4-week bills
The Treasury Department said it will sell $40 billion of four-week discount bills Tuesday. There are currently $93.002 billion of four-week bills outstanding.
Treasury also said it will sell $25 billion of eight-week bills Tuesday.
Treasury auctions discount rate bills
Tender rates for Treasury's latest 91-day and 182-day discount bills were higher, as the $45 billion of three-months incurred a 2.300% high rate, up from 2. 270% the prior week, and the $39 billion of six-months incurred a 2.425% high rate, up from 2.415% the week before.
Coupon equivalents were 2.346% and 2.489%, respectively. The price for the 91s was 99.418611 and that for the 182s was 98.774028.
The median bid on the 91s was 2.280%. The low bid was 2.245%.
Tenders at the high rate were allotted 11.28%. The bid-to-cover ratio was 3.06.
The median bid for the 182s was 2.405%. The low bid was 2.380%.
Tenders at the high rate were allotted 50.52%. The bid-to-cover ratio was 3.13.
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 Ziad Saba at 212-803-6079 for more information.