Volume in the municipal bond market should climb incrementally from the holiday week.
Total potential issuance for this week is expected to reach $161.3 million, up from total sales of just $14.0 million last week. Morgan Stanley should price the largest issue on tap, $99.7 million for the Entergy Arkansas, Inc. project, which involves two counties in the state.
The market recorded a negligible week of issuance in the primary and a sub-par week of activity in the secondary, leading to small gains in the belly of the yield curve. The 10-year, triple-A yield dropped five basis points since last Friday to 1.72%.
For a second week, though, there were strong outflows; weekly reporting funds lost $423 million. This is up, however, from the previous week's outflows of $2.31 billion, the largest such outpouring in almost two years.
Breaking down the volume numbers, there are $156.9 million of muni bond sales scheduled for negotiated sale this week, versus a revised $14.0 million that were reported sold last week. And $4.4 million in bond sales are slated for competitive sale this week, compared with none reported sold for last week.
Last week's volume number ranks as possibly the lowest Thomson Reuters' database has ever recorded. The record low for a single week during the period between 1986 and 2012 has been the week of Jan. 1 through Jan. 4, 1986, when $29.2 million reached the muni market.
Thomson Reuters' database goes back to 1980, but the firm says data collection for older numbers was less reliable.
Morgan Stanley on Thursday expects to price $99.7 million of Entergy Arkansas pollution control revenue refunding bonds in two sales. The bonds are rated A3 by Moody's Investors Service and A-minus by Standard & Poor's.
The first series, $54.7 million for Jefferson County, Ark., is scheduled to mature in 2017. The second series, $45 million for Independence County, Ark., is slated to mature in 2021.
Also, Bank of America Merrill Lynch should price $39.1 million of Orlando, Fla., wastewater system refunding and improvement revenue bonds. The bonds are rated Aa2 by Moody's and AA-plus by Standard & Poor's.