Municipal bond prices were mostly steady at mid-session, traders said, as the market looks to the week's $6.5 billion new-issue calendar, which is headlined by the Puerto Rico Aqueduct and Sewer Authority's $750 million bond sale and Detroit's first post-bankruptcy bond deal.
Secondary Trading
The yield on the 10-year benchmark muni general obligation was flat from 2.20% on Friday, while the yield on the 30-year GO was unchanged from 3.07%, according to a read of Municipal Market Data's triple-A scale. Intermediate maturities were down by as much as one basis point.
Treasury prices were higher on Monday, with the yield on the two-year Treasury note dropping to 0.70% from 0.73% on Friday, while the 10-year yield declined to 2.16% from 2.19% and the 30-year yield decreased to 2.81% from 2.84%.
The 10-year muni to Treasury ratio was calculated on Friday at 100.3% versus 100.2% on Thursday, while the 30-year muni to Treasury ratio stood at 108.1% compared to 107.5%, according to MMD.
Primary Market
Municipal volume for sale this week consists of over $5.3 billion of negotiated deals and almost $1.2 billion of competitive sales.
Bank of America Merrill Lynch is slated to price PRASA's $750 million of Series 2015A senior lien revenue bonds on Tuesday. The issue is rated Caa3 by Moody's Investors Service, CCC-minus by Standard & Poor's and CC by Fitch Ratings.
PRASA's speculative-grade bond sale will be the first from a Puerto Rico public sector agency since the March 2014 Puerto Rico general obligation bond sale. Since then, Puerto Rico Gov. Alejandro García Padilla has declared the commonwealth's debt to be unpayable given the commonwealth's current levels of economic growth and the Puerto Rico Public Finance Corp. defaulted on 99% of a $58 million debt payment due Aug. 1.
PRASA said it expects to pay about 10% on the Series 2015 A senior lien bonds, which is 1.4 percentage point more than the secondary market yield on its senior bonds maturing in 30 years. The authority's pricing will be led by BAML with JPMorgan, Popular Securities, and Santander Securities as junior underwriters.
Also garnering much interest this week is Detroit's first post-bankruptcy bond sale.
Scheduled for sale on Wednesday, Barclays Capital will price $245 million of local government loan program revenue bonds, which are being issued through the Michigan Finance Authority.
The bonds are enhanced with a statutory lien and intercept feature on Detroit's income tax, which will pay off the bonds. The protections, combined with debt-service coverage levels of 6.5 times, helped the deal win an A rating from Standard & Poor's.
Additionally, Citigroup is expected to price the New York Convention Center Development Corp.'s $650 million of refunding revenue hotel unit fee secured bonds on Wednesday. The issue is rated A1 by Moody's and A-plus by S&P.
Goldman, Sachs is slated to price the New York Metropolitan Transportation Authority's $398 million of Series 2015D transportation revenue refunding bonds. A retail order period is being held on Wednesday ahead of the institutional pricing on Thursday.
Barclays Capital is set to price the Illinois Finance Authority's $400 million of Series 2015A revenue bonds for the University of Chicago on Wednesday. The issue is rated Aa2 by Moody's, AA by S&P and AA-plus by Fitch.
Citi is expected to price the Hillsborough County, Fla., Aviation Authority's $386 million of tax-exempt and taxable airport revenue bonds for the Tampa International Airport on Tuesday. The bonds are rated A3 by Moody's and A-minus by S&P and Fitch.
And Citi is set to price the Massachusetts Development Finance Agency's $290 million of tax-exempt and taxable revenue bonds on Thursday. The issue is rated A3 by Moody's and A-minus by S&P.
In the competitive arena on Tuesday, Portland, Ore., will sell $341.53 million of Series 2015A first lien sewer system revenue refunding bonds and $62.39 million of Series 2015B second lien sewer system revenue refunding bonds The Series 2015A bonds are rated Aa2 by Moody's and AA by S&P while the Series 2015B bonds are rated Aa3 by Moody's and AA-minus by S&P.
Prior Week's Actively Traded Issues by Sector
Revenue bonds comprised 54.81% of new issuance in the week ended Aug. 14, up from 54.57% in the previous week, according to Markit. General obligation bonds comprised 36.95% of total issuance, up from 36.56%, while taxable bonds made up 8.24%, down from 8.87%.
Some of the most actively traded issues during the week were in New York, Puerto Rico and Kansas, according to Markit.
In the revenue bond sector, the New York State Dormitory non-state supported debt 4s of 2036 were traded 61 times. In the GO bond sector, the Puerto Rico commonwealth 8s of 2035 were traded 32 times. And in the taxable bond sector, the Kansas Development Financing Authority revenue 4.727s of 2037 were traded 33 times, Markit said.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 29,253 trades on Friday on volume of $6.282 billion.
The most active bond, based on the number of trades, was the Texas Transportation Commission's Series 2012A highway improvement GO 5s of 2026, which traded 186 times.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $602.3 million to $9.52 billion on Monday. The total is comprised of $3.01 billion competitive sales and $6.51 billion of negotiated deals.
