Top-rated municipal bonds were steady at mid-session, according to traders, who were seeing the first of the week's new supply started to hit the screens.
Secondary Market
The 10-year benchmark muni general obligation yield was flat from 2.32% on Monday, while the yield on the 30-year GO was steady from 3.05%, 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 1.17% from 1.14% on Monday, while the 10-year Treasury yield gained to 2.44% from 2.40%, and the yield on the 30-year Treasury bond increased to 3.02% from 2.99%.
On Monday, the 10-year muni to Treasury ratio was calculated at 96.6% compared to 94.5% on Friday, while the 30-year muni to Treasury ratio stood at 102.0%, versus 100.5%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 41,065 trades on Monday on volume of $8.18 billion.
Primary Market
The Metropolitan Government of Nashville and Davidson County, Tenn., competitively sold $457.25 million of Series 2017 unlimited tax general obligation bonds.
Citigroup won the bonds with a true interest cost of 3.15%. The issue was priced to yield from 1% with a 4.5% coupon to 3.47% with a 4% coupon in 2036.
The deal is rated Aa2 by Moody's Investors Service and AA by S&P Global Ratings.
Since 2007, the county has issued about $5.56 billion of debt, with the largest issuance occurring in 2010 when it sold roughly $1.2 billion of debt. The Music City did not come to market at all in 2009. With Tuesday's sale, it has already sold more bonds than it did in all of last year.
Also in the competitive arena, Fairfax County, Va., sold $234.02 million of Series 2017A public improvement bonds.
Morgan Stanley won the bonds with a TIC of 2.87%. Pricing information was not immediately available. The deal is rated triple-A by Moody's, S&P and Fitch Ratings.
In the negotiated sector, Barclays Capital priced the Massachusetts Development Finance Agency's $129.32 million of Series 2017T revenue bonds for Boston College.
The issue was priced to yield from 3.57% with a 3.375% coupon in 2033 to 3.33% with a 5% coupon in 2039; a split 2042 maturity was priced as 4s to yield 3.88% and as 5s to yield 3.38%. The deal is rated Aa3 by Moody's and AA-minus by S&P.
Bank of America Merrill Lynch priced as a remarketing a $119.58 million issue for the Ascension Health Credit Group.
The Connecticut Health and Educational Facilities Authority's $25 million of Series 1999B variable-rate revenue bonds was priced at par to yield 1.65% in 2029 with a mandatory tender date of 2019.
The Indiana Health Facilities Financing Authority's $94.58 million of Series 2001A-2 revenue bonds were priced as 4s to yield 1.45% in 2036 with a mandatory tender date of 2019.
The deal is rated Aa2 by Moody's and AA-plus by S&P and Fitch.
Citigroup priced the Kentucky State Property and Building Commission's $226.8 million of Project 115 revenue bonds. The issue was priced to yield from 1.56% with a 5% coupon and a 3% coupon in a split 2019 maturity to 3.86% with a 5% coupon in 2038. The 2018 maturity was offered as a sealed bid. The deal is rated Aa3 by Moody's, A by S&P and A-plus by Fitch.
On Wednesday, the Los Angeles County Metropolitan Transportation Authority, Calif., is competitively selling $455.71 million of Series 2017A Proposition C sales tax revenue bonds. The deal is rated Aa2 by Moody's and AA-plus by S&P.
In the negotiated sector on Wednesday, Citigroup is expected to price the Mayor and City Council of Baltimore's $486 million of Series 2017A-C revenue bonds for water and wastewater projects for retail investors. The deal is rated Aa2 by Moody's and AA by S&P.
Jefferies is expected to price the Texas Public Finance Authority's $275 million of Series 2017 taxable GO and refunding bonds.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $39.6 million to $10.87 billion on Tuesday. The total is comprised of $2.81 billion of competitive sales and $8.06 billion of negotiated deals.
Ramirez Sees Negative Net Supply Over Next Month
Ramirez & Co. expects that over the next 30 days, the market will see gross supply at $9.58 billion but net muni market supply at negative $14.32 billion.
"The states that stand to experience the largest change in outstanding debt include Texas (negative $5.14 billion), New York (negative $2.19 billion), California (negative $1.79 billion), Minnesota (negative $1.70 billion), and Georgia (negative $1.08 billion)," Ramirez said in a Monday market comment. "We estimate long-term new issue gross supply for 2017 at $368 billion, for a decline of about $60 billion or negative 14%, which incorporates $204 billion of new money bonds and $164 billion of refundings. We expect 2017 to end with net market supply at $38 billion."
