Munis strengthen ahead of supply
Municipal bonds were trading mostly stronger on Monday ahead of the week’s $7.2 billion new issue slate.
This week’s calendar is composed of $5.6 billion of negotiated deals and $1.6 billion of competitive sales.
Bank of America Merrill Lynch is set to price Hawaii’s $550 million of general obligation bonds on Wednesday after a one-day retail order period.
The bonds are being sold in three tranches: a $454.2 million tax-exempt series, a $50 million taxable series, and a $45.7 million taxable series.
Ahead of the deal, Moody's Investors Service affirmed its Aa1 rating, S&P Global Ratings affirmed its AA-plus rating and Fitch Ratings affirmed its AA rating.
Also on tap is the Los Angeles County Metropolitan Transportation Authority’s $545 million deal.
Siebert Cisneros Shank is expected to price the Proposition C sales tax senior revenue bonds on Wednesday after a one-day retail order period. The issue is composed of Series 2019A green bonds and Series 2019B revenue bonds.
The deal is rated Aa2 by Moody’s, AAA by S&P and Kroll Bond Rating Agency and AA-plus by Fitch.
On the competitive side, Washington state is selling $640.925 million of general obligation bonds in two offerings on Tuesday.
The deals consist of $468.695 million of Series 2019C various purpose GOs and $172.23 million of Series 2019D motor vehicle fuel tax GOs.
Proceeds of the Series 2019C&D bonds will be used to reimburse expenditures for various state capital projects and programs.
The financial advisors are Montague DeRose & Associates and Piper Jaffray. The bond counsel is Foster Pepper.
The deals are rated Aa1 by Moody’s and AA-plus by S&P and Fitch.
“The coming week should be an active one for tax-free investors,” According to a Monday market comment from Janney.
“Those seeking Massachusetts bonds will have choices this week. The Massachusetts Port Authority has a $325 million offering of AMT bonds scheduled for Logan Airport (Aa2/AA/AA),” Janney said. “The other large Mass. offering is $415 million for Wellforce (NR/BBB+/BBB+), whose obligated group includes Tufts Medical Center and Lowell General Hospital. The Wellforce offering includes an $80 million taxable piece. The issue will be wrapped by Assured Guaranty (S&P: AA).”
Bond Buyer 30-day visible supply at $9.50B
The Bond Buyer's 30-day visible supply calendar increased $912.3 million to $9.50 billion for Monday. The total is comprised of $2.35 billion of competitive sales and $7.15 billion of negotiated deals.
Municipal bonds were mostly stronger Monday, according to a midday read of the MBIS benchmark scale. Benchmark muni yields fell as much as four basis points in the one- to nine-year and 12- to 30-year maturities and rose less than a basis point in the 10- and 11-year maturities.
High-grade munis were mostly stronger, with muni yields falling as much as three basis points in the one- to eight-year, 12- to 20-year, 22-year and 24- to 30-year maturities, rising less than a basis point in the 10- and 11-year maturities and remaining unchanged in the nine-year, 21-year and 23-year maturities.
Municipals were steady on Municipal Market Data’s AAA benchmark scale, which showed the yield on both the 10-year muni general obligation and on 30-year muni maturity remaining unchanged.
Treasury bonds were weaker as stock prices traded little changed.
On Friday, the 10-year muni-to-Treasury ratio was calculated at 81.0% while the 30-year muni-to-Treasury ratio stood at 100.0%, 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 34,976 trades on Friday on volume of $11.90 billion.
California, New York and Texas were the municipalities with the most trades, with the Golden State taking 15.917% of the market, the Empire State taking 15.101% and the Lone Star State taking 9.882%.
Prior week's actively traded issues
Revenue bonds comprised 55.54% of total new issuance in the week ended Feb. 1, down from 55.69% in the prior week, according to Markit. General obligation bonds made up 38.67%, up from 38.42% while taxable bonds accounted for 5.79%, down from 5.89%.
Some of the most actively traded munis by type in the week were from Puerto Rico, New York and California issuers.
In the GO bond sector, the Puerto Rico 8s of 2035 traded 28 times. In the revenue bond sector, the New York Metropolitan Transportation Authority 4s of 2020 traded 110 times. In the taxable bond sector, the California 7.55s of 2039 traded 18 times.
Treasury auctions discount rate bills
Tender rates for the Treasury Department's latest 91-day and 182-day discount bills were mixed, as the $45 billion of three-months incurred a 2.385% high rate, up from 2.375% the prior week, and the $39 billion of six-months incurred a 2.440% high rate, down from 2.450% the week before.
Coupon equivalents were 2.433% and 2.505%, respectively. The price for the 91s was 99.397125 and that for the 182s was 98.766444.
The median bid on the 91s was 2.360%. The low bid was 2.320%. Tenders at the high rate were allotted 26.49%. The bid-to-cover ratio was 3.03.
The median bid for the 182s was 2.400%. The low bid was 2.370%. Tenders at the high rate were allotted 46.41%. The bid-to-cover ratio was 2.66.
Gary E. 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.