Municipal bonds were stronger with Treasuries at mid-session as stocks moved lower on Tuesday.
The spread on the three-year and five-year Treasury bills inverted by about 1½ basis points Monday, the first time it was negative in 11 years, and the two- to five-year yield curve followed.
The 2- to 10-year spread, which is considered the most important curve, was at 14 basis points, also the flattest in more than a decade.
Secondary market
Municipal bonds were stronger, according to a read of the MBIS benchmark scale. Benchmark muni yields fell as much as three basis points in the one- to 30-year maturities.
High-grade munis were stronger, with yields calculated on MBIS' AAA scale decreasing 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 both the 10-year muni general obligation and on the 30-year muni maturity falling three to five basis points.
Treasury bonds were stronger as stocks traded down. The Treasury 10-year stood at 2.949%, the five-year was at 2.826%, the two-year was at 2.844% while the Treasury three-month bill stood at 2.425%.
On Monday, the 10-year muni-to-Treasury ratio was calculated at 83.9% while the 30-year muni-to-Treasury ratio stood at 98.5%, 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.
The fixed-income markets will be closed on Wednesday for the national day of mourning honoring former President George H.W. Bush.
Previous session's activity
The Municipal Securities Rulemaking Board reported 44,616 trades on Monday on volume of $11.27 billion.
California, Texas and New York were the municipalities with the most trades, with the Golden State taking 13.757% of the market, the Lone Star State taking 10.701% and the Empire State taking 10.561%.
Primary market
JPMorgan Securities priced the New York City Housing Development Corp.’s $300.93 million of Series 2018K multi-family (Sustainable Neighborhood) housing revenue bonds.
The deal is rated Aa2 by Moody’s and AA-plus by S&P.
Hilltop Securities priced San Antonio’s $135.92 million of Series 2018 electric and gas systems variable-rate junior lien revenue refunding bonds.
The deal is rated Aa2 by Moody’s, AA-minus by S&P and AA-plus by Fitch.
Since 2008, the city has sold about $13 billion of bonds, with the most issuance occurring in 2012 when it offered $2.1 billion. It sold the least amount of bonds in 2011 when it issued $411 million.
JPMorgan Securities is set to price Chicago’s $1.848 billion of general airport senior lien revenue and refunding bonds on Tuesday for O’Hare International Airport.
The deal is equally divided into a Series 2018B tax-exempt series of senior lien general airport revenue bonds not subject to the alternative minimum tax, a Series 2018A tax-exempt GARB series subject to the AMT, and a Series 2018C taxable GARB series.
Frasca & Associates and Swap Financial Group are financial advisors while Mayer Brown and Neal & Leroy are bond counsel.
S&P Global Ratings and Fitch Ratings have affirmed their A ratings for O’Hare while Kroll Bond Rating Agency affirmed its A-plus rating. All three assign a stable outlook.
Also on tap, Morgan Stanley is set to price the New York State Housing Finance Agency’s $240 million of affordable housing revenue bonds.
The deal is rated Aa2 by Moody’s Investors Service.
Goldman Sachs is expected to price Detroit’s $111 million of general obligation unlimited tax bonds.
The deal is rated Ba3 by Moody’s and B-plus by S&P.
In the short-term sector, Morgan Stanley is expected to price Nassau County, N.Y.’s $578 million of notes. The issue is composed of Series 2018A tax anticipation notes, Series 2018B tax anticipation notes, Series 2018A revenue anticipation notes, Series 2018B bond anticipation notes and Series 2018C bond anticipation notes. The deal is rated SP1 by S&P and F1 by Fitch.
Bond sale results
New York
Texas
Bond Buyer 30-day visible supply at $12.56B
The Bond Buyer's 30-day visible supply calendar decreased $98.2 million to $12.56 billion for Tuesday. The total is comprised of $1.81 billion of competitive sales and $10.74 billion of negotiated deals.
Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation.
