The muni market firmed up on Monday, ahead of what should be another busy week.
Ipreo forecasts weekly bond volume will rise to $6.4 billion, from a revised total of $6.1 billion last week, according to updated data from Refinitiv. The calendar is composed of $4.96 billion of negotiated deals and $1.4 billion of competitive sales.
The market is ready and waiting for the deals to start coming in, one New York trader said.
“Things have been going well of late and I don’t think that is changing this week,” he said. “Demand for munis shouldn’t weaken anytime soon, especially as more people realize how cheap the long-end is.”
Patrick Luby, senior municipal strategist at CreditSights, said “demand will get a significant boost this Friday when issuers return $10.8 billion in maturing and called principal."
Bank of America Merrill Lynch is slated to price Washington, D.C.’s $941.48 million of general obligation bonds on Wednesday. The bonds are rated Aaa by Moody’s Investors Service and AA-plus by S&P Global Ratings and Fitch Ratings.
Goldman Sachs is expected to price the Dormitory Authority of the State of New York’s $845.05 million of Series 2019A tax-exempt and Series 2019B taxable and taxable green bonds on Tuesday. The deal is rated Aa2 by Moody’s and AA-minus by S&P.
Citigroup is set to price Oregon’s $519 million of GOs on Wednesday, consisting of Series 2019A tax-exempts, Series 2019B taxable sustainability bonds, Series 2019C taxable bonds and Series 2019D tax-exempts. The deal is rated Aa1 by Moody’s and AA-plus by S&P and Fitch.
In the competitive arena, Texas is selling $159.965 million of GO college student loan bonds subject to the alternative minimum tax on Tuesday. The deal is rated AAA by S&P.
The state of Delaware is selling $250 million of GOs on Wednesday. The deal is rated triple-A by Moody’s and S&P.
Secondary market
Municipal bonds were stronger on Monday, according to a late read of the MBIS benchmark scale. Benchmark muni yields fell as much as four basis points in the one- to 30-year maturities.
High-grade munis were also stronger, with muni yields falling as much as three basis points across the curve.
Municipals were mixed on Municipal Market Data’s AAA benchmark scale, which showed the yield on the 10-year muni general obligation unchanged and the 30-year muni maturity was one basis point higher.
On Monday, the 10-year muni-to-Treasury ratio was calculated at 79.8% while the 30-year muni-to-Treasury ratio stood at 99.3%, 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 actively traded issues
Revenue bonds comprised 55.60% of total new issuance in the week ended Feb. 8, up from 55.54% in the prior week, according to
Some of the most actively traded munis by type in the week were from Puerto Rico and New York issuers.
In the GO bond sector, the Puerto Rico 5s of 2041 traded 19 times. In the revenue bond sector, the New York Metropolitan Transportation Authority 4s of 2020 traded 190 times. In the taxable bond sector, the Puerto Rico GDB Debt Recovery Authority 7.5s of 2040 traded 17 times.
Previous session's activity
The Municipal Securities Rulemaking Board reported 435,315 trades on Friday on volume of $12.031 billion.
California, New York and Texas were the municipalities with the most trades, with the Golden State taking 19.011% of the market, the Empire State taking 10.317% and the Lone Star State taking 9.686%.
Treasury auctions discount rate bills
Tender rates for the Treasury Department's latest 91-day and 182-day discount bills were higher, as the $45 billion of three-months incurred a 2.400% high rate, up from 2.385% the prior week, and the $39 billion of six-months incurred a 2.450% high rate, up from 2.440% the week before.
Coupon equivalents were 2.448% and 2.515%, respectively. The price for the 91s was 99.393333 and that for the 182s was 98.761389.
The median bid on the 91s was 2.380%. The low bid was 2.350%.
Tenders at the high rate were allotted 28.12%. The bid-to-cover ratio was 2.96.
The median bid for the 182s was 2.420%. The low bid was 2.390%.
Tenders at the high rate were allotted 40.23%. The bid-to-cover ratio was 2.95.
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.
