Top-quality municipal bonds were steady at mid-session, traders said, as the market got ready to take on the first sales from a hefty $12.7 billion new issue calendar.
Secondary Market
The yield on 10-year benchmark muni general obligation was unchanged from 1.62% on Friday, while the 30-year muni yield was steady from 2.40%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were weaker. The yield on the two-year Treasury rose to 0.80% from 0.78% on Friday, while the 10-year Treasury yield gained to 1.73% from 1.70% and the yield on the 30-year Treasury bond increased to 2.54% from 2.52%.
The 10-year muni to Treasury ratio was calculated at 95.1% on Friday compared to 91.8% on Thursday, while the 30-year muni to Treasury ratio stood at 95.3% versus 94.0%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 33,702 trades on Friday on volume of $13.90 billion.
Prior Week's Actively Traded Issues
Revenue bonds comprised 52.19% of new issuance in the week ended June 3, down from 53.06% in the previous week, according to data released by
General obligation bonds comprised 40.94% of total issuance, up from 39.99%, while taxable bonds made up 6.87%, down from 6.95%.
Some of the most actively traded issues by type were from Massachusetts and New York issuers. In the GO bond sector, the Mass. Educational Financing Authority 3.5s of 2033 were traded 29 times. In the revenue bond sector, the Dormitory Authority of the State of New York 4s of 2043 were traded 37 times. And in the taxable bond sector, the DASNY 3.879s of 2046 were traded 66 times, Markit said.
Previous Week's Top Underwriters
The top negotiated and competitive underwriters of last week included Citigroup, Morgan Stanley, Bank of America Merrill Lynch, Wells Fargo Securities and RBC Capital Markets, according to Thomson Reuters data. In the week of May 29-June 4, Citi underwrote $1.45 billion, Morgan Stanley did $837.7 million, BAML had $367.7 million, Wells Fargo did $326.4 million and RBC had $238.7 million.
Primary Market
Volume is estimated at $12.71 billion, the high week for the year, in a calendar which consists of $7.29 billion of negotiated deals and $5.42 billion of competitive sales.
On Tuesday, Georgia will competitively sell about $1.37 billion of bonds in five separate offerings.
The deals include $382 million of Series 2016C-1 and C-2 general obligation refunding bonds, $362 million of Series 2016A Tranche 1 GOs, $356 million of Series 2016A Tranche 2 GOs, $200 million of Series 2016B taxable GOs, and $68 million of Series 2016D taxable refunding GOs.
All five sales are rated triple-A by Moody's Investors Service, S&P Global Ratings and Fitch Ratings.
Also on Tuesday, Prince George's County, Md., will sell $177 million of GOs in two separate offerings consisting of $115.8 million of Series 2016A GO consolidated public improvement bonds and $61.55 million of Series 2016B GO consolidated public improvement refunding bonds. Both deals are rated triple-A by Moody's, S&P and Fitch.
In the negotiated arena on Tuesday, Citigroup is expected to price the New York Transportation Development Corp.'s $850 million of special facility revenue refunding AMT bonds for the American Airlines JFK Project.
Additionally, Bank of America Merrill Lynch is set to price the Greater Chicago Metropolitan Water Reclamation District's $432 million of Series 2016 A, B, C, D, E, F GOs. The deal is rated AA-plus by S&P and triple-A by Fitch.
"An interesting deal coming this week for the Metropolitan Water Reclamation District of Greater Chicago (NR/AA+/AAA), combines the essentiality of a wastewater servicer with the continually expanding 'green bond' market," Janney Municipal Credit Analyst Eric Kazatsky wrote in a Monday market comment. "The district provides wastewater treatment services to approximately 5.2 million people located in Chicago and 128 suburban communities. The bonds, which will refund existing debt and finance capital improvements, are supported by ad valorem taxes."
Kazatsky said the use of green bonds has been gradually changing.
"Green bonds, originally conceptualized by the World Bank to help stimulate participation in projects that mitigated the impact of climate change, have expanded the scope of projects that they cover especially in the water and wastewater sector where sustainability is a key focus for new capital plans," he wrote. "For instance, the 2016 MWRDGC bonds will be used to fund construction of a new reservoir and the implementation of new energy efficiency projects aimed at reducing air pollution."
JP Morgan is expected to price the District of Columbia's $422 million of Series 2016A of GO bonds on Tuesday. The deal is rated Aa1 by Moody's and AA by S&P and Fitch.
And Barclays Capital is set to price the Pennsylvania State University's $2349 million of Series 2016B refunding bonds. The deal is rated Aa1 by Moody's and AA by S&P.
On Tuesday's short-term negotiated calendar, Piper Jaffray is slated to price Idaho's $514 million of tax anticipation notes.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $585.9 million to $16.55 billion on Monday. The total is comprised of $7.64 billion of competitive sales and $8.91 billion of negotiated deals.
