Munis weaken as new deals sell

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Top-rated municipal bonds were weaker at midday, according to traders, as the first of this week’s new deals hit the screens on Tuesday.

Secondary market
Municipals turned weaker with Treasuries as equities continued to rise, with the Dow Jones Industrial Average up 0.29%, the S&P 500 up 0.18% and the NASDAQ up 0.11%.

The yield on the 10-year benchmark muni general obligation rose as much as two basis points from 1.83% on Monday, while the 30-year GO yield gained three to five basis points from 2.68%, according to a read of Municipal Market Data's triple-A scale.

U.S. Treasuries were weaker on Tuesday. The yield on the two-year Treasury rose to 1.33% from 1.30% on Monday, the 10-year Treasury yield gained to 2.17% from 2.11% and the yield on the 30-year Treasury bond increased to 2.77% from 2.73%.

On Monday, the 10-year muni-to-Treasury ratio was calculated at 86.0%, compared with 87.9% on Friday, while the 30-year muni-to-Treasury ratio stood at 97.7% versus 98.9%, according to MMD.

MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 29,913 trades on Monday on volume of $6.25 billion.

Primary market
Siebert Cisneros Shank & Co. priced New York City’s $855.56 million of Fiscal 2018 Series B and Series 1 bonds on the first of a two-day retail order period ahead of the institutional pricing on Thursday.

The $550 million of the B-1 bonds were priced for retail to yield from 0.90% with a 3% in 2019 to 1.02% with a 4% coupon in 2020 and from 3.05% with a 3% coupon in 2034 to 2.98% with a 4% coupon in 2036. The bonds were also priced to yield 3.15% with a 4% coupon in 2040 and 3.32% with a 3.25% coupon in 2042. No retail orders were being taken in the 2030 through 2033, 2037 through 2039 and the 2041 maturities.

The $305.56 million of Series 1 bonds were priced for retail to yield from 1.01% with a 2% coupon in 2020 to 2.57% with a 5% coupon in 2033.

The deal is rated Aa2 by Moody’s Investors Service and AA by S&P Global Ratings and Fitch Ratings.

"The AA GO rating reflects our view of New York City's strong economy, with access to a broad and diverse metropolitan statistical area," S&P analyst Anne Cosgrove said on Monday.

Fitch looked at the diversification of the city’s economy.

“Fitch considers the city's unique economic profile, which centers on its identity as an international center for numerous industries and a major tourist destination, to be a credit strength,” Fitch said in a report issued on Monday.

New York City has about $38 billion of GO debt outstanding as of June 30.

In the competitive arena on Tuesday, the state of Louisiana sold $302.71 million of Series 2017B general obligation bonds, which were won by Bank of America Merrill Lynch with a true interest cost of 2.95%.

The issue was priced to yield from 0.94% with a 5% coupon in 2018 to 3.34% with a 3.25% coupon in 2037.

The deal is rated Aa3 by Moody’s and AA-minus by S&P and Fitch.

Since 2008, the Bayou state has sold $9.76 billion of securities, with the most issuance occurring in 2012 when it sold $1.8 billion. The state saw the least amount of issuance in 2008 when it sold $200 million. With Tuesday’s sale, it will have issued more bonds this year than it did last year.
Prince George's County, Md., sold $104 million of Series 2017 certificates of participation for the Regional Medical Center.

Robert W. Baird won the bonds with a TIC of 3.21%. Pricing information was not immediately available.

The COPs are rated Aa1 by Moody’s and AA-plus by S&P.

And the state of Michigan sold $119.58 million of GOs in two separate sales.

Goldman Sachs won the $79 million of Series 2017A tax-exempt GO environmental program and refunding bonds with a TIC of 1.70% while Fifth Third Securities won the $40.58 million of Series 2017B taxable GO environmental program bonds with a TIC of 2.11%.

The deals are rated Aa1 by Moody’s, AA-minus by S&P and AA by Fitch.

Back in the negotiated sector, Citigroup is expected to price the Tennessee State School Bond Authority’s $402 million of Series 2017A and B tax-exempt and Series 2017C taxable higher educational facilities second program bonds on Tuesday. The deal is rated Aa1 by Moody’s and AA-plus by S&P and Fitch.

Citi is also set to price the state of Ohio’s $115 million of Series 2017A turnpike revenue refunding bonds. The deal is rated Aa3 by Moody’s, AA-minus by S&P and AA by Fitch.

And RBC Capital Markets is expected to price the Minnesota Housing Finance Agency’s $125 million of Series 2017G non-AMT and Series 2017H taxable homeownership finance bonds issued under the mortgage-backed securities pass-through program. The deal is rated Aaa by Moody’s.

On Wednesday, the Maryland Department of Transportation is competitively selling $500 million of Series 2017 second issue consolidated transportation bonds.

The deal is rated Aa1 by Moody’s, AAA by S&P and AA-plus by Fitch.

Bond Buyer reports 30-day visible supply
The Bond Buyer's 30-day visible supply calendar decreased $21.5 million to $10.33 billion on Tuesday. The total is comprised of $5.54 billion of competitive sales and $4.79 billion of negotiated deals.

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Primary bond market Secondary bond market City of New York, NY State of Louisiana State of Ohio State of Michigan Minnesota Housing Finance Agency County of Prince George’s, MD Tennessee State School Bond Authority