Municipal CUSIP requests increased in January, a sign of future issuance, after a volatile period in 2018 that reflected the seesaw effects of interest rate worries and economic uncertainty.
The aggregate total of requests for CUSIP numers for all municipal securities, which includes municipal bonds, long-term and short-term notes and commercial paper, rose 10.5% last month from January 2018. CUSIP is an acronym for Committee on Uniform Security Identification Procedures. CUSIP numbers are used to identify securities.
“Uncertainty over the future of interest rates has been visible in CUSIP request volume for the past several months and appears to be continuing into 2019,” said Gerard Faulkner, CUSIP’s director of operations. “Overall, volumes are healthy as we kick off the new year, but we expect to continue to see continued swings in volume in the face of ongoing economic and geopolitical uncertainty.”
There were a total of 809 new municipal requests during January versus 732 in January 2018. In December 2018, muni requests totaled 874.
Municipal bond requests totaled 650 in January, a 7.1% increase over the same time last year while long-term note requests rose to 32, a 33.3% rise from 24 in January 2018.
Among top state issuers, CUSIPs for scheduled public finance offerings from Texas, California and New York were the most active in January.
Primary market
The municipal bond primary market remained vibrant on Wednesday as more new supply hit the screens, led by general obligation deals from the District of Columbia and Delaware.
In the negotiated sector, Bank of America Merrill Lynch priced Washington, D.C.’s $941.48 million of Series 2019A general obligation bonds. The bonds are rated Aaa by Moody’s Investors Service and AA-plus by S&P Global Ratings and Fitch Ratings.
Citigroup priced Oregon’s $464.75 million of GOs, consisting of Series 2019A tax-exempts and Series 2019D tax-exempts. The deal is rated Aa1 by Moody’s and AA-plus by S&P and Fitch.
BAML received the written award on the Orange County, California, Local Transportation Authority’s $376.69 million of Series 2019 limited tax Measure M2 sales tax revenue bonds. The deal is rated AA-plus by S&P and Fitch.
In the competitive arena, the state of Delaware sold $250 million of GOs on Wednesday.
BAML won the bonds with a true interest cost of 2.6229%. Proceeds will be used to finance capital projects. The financial advisor is PFM Financial Advisors; the bond counsel is Saul Ewing Arnstein. The deal is rated triple-A by Moody’s and S&P and Kroll Bond Rating Agency.
The Las Vegas Valley Water District, Nevada, sold $110.715 million of limited tax GO water refunding bonds additionally secured by SNWA pledged revenues.
RBC Capital Markets won the bonds with a TIC of 3.5734%. Proceeds will be used to refund certain outstanding debt. The financial advisors are Hobbs, Ong & Associates and PFM Financial Advisors; the bond counsel is Sherman & Howard. The deal is rated Aa1 by Moody’s and AA-plus by S&P.
Goldman Sachs received the official award on the Dormitory Authority of the State of New York’s $603.46 million of Series 2019A tax-exempt revenue bonds for New York University and DASNY’s $259.295 million of Series 2019B-1 taxable and Series 2019B-1 taxable green bonds. The deal is rated Aa2 by Moody’s and AA-minus by S&P Global Ratings.
RBC priced the Tennessee Housing Development Agency’s $175 million of Issue 2019-1 residential finance program bonds, not subject to the alternative minimum tax. The deal is rated Aa1 by Moody’s and AA-plus by S&P.
Wednesday’s bond sales
Washington, D.C.
Delaware
Oregon
California
New York
Tennessee
Bond Buyer 30-day visible supply at $8.96B
The Bond Buyer's 30-day visible supply calendar decreased $90.3 million to $8.96 billion for Wednesday. The total is comprised of $2.42 billion of competitive sales and $6.54 billion of negotiated deals.
Secondary market
Municipal bonds were mostly weaker Wednesday, according to a late read of the MBIS benchmark scale. Benchmark muni yields fell as much as one basis point in the one- to three-year and eight- to 11-year maturities, were up as much as a basis point in the five- to seven-year and 12- to-30 year maturities and were unchanged in the four-year maturity.
High-grade munis were mixed, with muni yields falling less than one basis point in the one- to 11-year and 19- and 20-year maturities, rising less than a basis point in the 12- to 16-year, 19- and 20-year and 23- to 30-year maturities and remaining unchanged in the 17- and 18-year, 21- and 22-year maturities.
Municipals were weaker on Municipal Market Data’s AAA benchmark scale, which showed the yield on the 10-year muni general obligation rising two basis points and the yield on the 30-year muni maturity gaining two basis points.
“The broader muni curve is up one to two basis points with the larger movement from 2033 and longer,” ICE Data Services said in a Wednesday market comment. “High-yield is also one basis point higher in yield as well. Tobaccos are fairly quiet and the market is mixed today. The taxable side of the market is yielding as much as 2.7 basis points higher with the greatest movement in the three-year.”
Treasury bonds were weaker as stock prices traded higher.
On Tuesday, the 10-year muni-to-Treasury ratio was calculated at 79.0% while the 30-year muni-to-Treasury ratio stood at 99.7%, 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 38,734 trades on Tuesday on volume of $12.56 billion.
New York, California and Texas were the municipalities with the most trades, the Empire State taking 14.545% of the market, the Golden State taking 12.869% and the Lone Star State taking 10.34%.
Previous session's activity
The Municipal Securities Rulemaking Board reported 38,734 trades on Tuesday on volume of $12.56 billion.
New York, California and Texas were the municipalities with the most trades, the Empire State taking 14.545% of the market, the Golden State taking 12.869% and the Lone Star State taking 10.34%.
Previous session's activity
The Municipal Securities Rulemaking Board reported 38,734 trades on Tuesday on volume of $12.56 billion.
New York, California and Texas were the municipalities with the most trades, the Empire State taking 14.545% of the market, the Golden State taking 12.869% and the Lone Star State taking 10.34%.
ICI: Muni funds see $2.96B inflow
Long-term municipal bond funds and exchange-traded funds saw a combined inflow of $2.961 billion in the week ended Feb. 6, the Investment Company Institute reported on Wednesday.
This followed an inflow of $1.947 billion to the tax-exempt mutual funds in the week ended Jan. 30.
Long-term muni funds alone saw an inflow of $3.264 billion while ETF muni funds saw an outflow of $303 million in the week ended Feb. 6.
Taxable bond funds saw combined inflows of $13.133 billion in the latest reporting week after experiencing inflows of $5.824 billion in the previous week.
ICI said the total combined estimated inflows out of all long-term mutual funds and exchange-traded funds were $17.452 billion for the week ended Feb. 6 after outflows of $5.639 billion in the prior week.
Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation.
