Munis will see more than $5 billion of new supply as the Federal Open Market Committee is set to meet in the coming week and raise interest rates again.

Ipreo estimates volume will drop to $5.55 billion, from the revised total of $9.32 billion sold in the past week, according to updated figures from Thomson Reuters. The calendar for the week ahead is composed of $4 billion of negotiated deals and $1.55 billion in competitive sales.

There are 12 sales scheduled of $100 million or larger, four from the competitive arena. The slate is heavy with New York paper as well as housing deals.

The FOMC is set to meet on Tuesday and Wednesday, with a hike in interest rates fully priced in by fed fund futures. The market expects another 0.25% increase.

“Barclays expects a hike next week and two more this year,” said Mikhail Foux, director of municipal research at Barclays Capital. “Supply is picking up, but investors got a-lot of cash in June and we still have fund inflows. The market is in a good shape to absorb the pipeline. “

JPMorgan is set to price the New York City Housing Development Corp.’s $553.085 million of multi-family housing sustainable neighborhood revenue bonds on Tuesday. The deal is rated Aa2 by Moody’s Investors Service and AA-plus by S&P Global Ratings.

Citi is slated to price the Massachusetts Development Finance Agency’s $436 million of revenue bonds on Wednesday. The deal is rated Baa1 by Moody’s and A-minus by S&P.

The largest competitive sale will take place Tuesday, when Wayne County, Michigan, Charter will sell $156.285 million of taxable revenue general obligation bonds.

Puerto Rico bonds trade higher
Puerto Rico bonds traded up on Friday.

A lawyer representing Puerto Rico’s non-bondholding creditors, Puerto Rico’s Oversight Board, and other parties and a lawyer representing the Puerto Rico Sales Tax Financing Corp. (COFINA) reached an agreement to settle the commonwealth-COFINA dispute. On Thursday night, the COFINA lawyer announced the terms. According to an industry source, the deal would mean the forgiveness of about $6 billion of about $18 billion of COFINA debt with substantially better recoveries for COFINA seniors than for COFINA subordinates.

In late trading on Friday, the benchmark Puerto Rico Commonwealth Series 2014A GO 8s of 2035 were trading at a high price of 42.4 cents on the dollar compared to 41 cents on Thursday, according to the MSRB’s EMMA website. Volume totaled $57.85 million in 30 trades compared to $24.16 million in seven trades on Thursday.

The COFINA Series 2007B revenue 6.05s of 2036 traded at a high price of 84.25 cents on the dollar compared to 79.5 cents on Thursday, according to EMMA. Volume totaled $62.38 million in 87 trades compared to $25.84 million in 77 trades on Thursday.

The COFINA Series 2010C first subordinate capital appreciation bonds of 2037 traded at a high price of 10.9 cents on the dollar on Friday compared to 6.951 cents on May 30, according to EMMA. Volume totaled $26.45 million in 10 trades compared to $200,000 in two trades on May 30.

The COFINA Series 2011C senior current interest revenue 5s of 2040 [CUSIP: 74529JNU5] traded at a high price of 84 cents on the dollar compared to 78 cents on Thursday, according to EMMA. Volume totaled $56.44 million in 22 trades compared to $7.71 million in 62 trades on Thursday.

The COFINA Series 2011C senior current interest revenue 5.25s of 2040 [CUSIP: 74529JNX9] traded at a high price of 84 cents on the dollar compared to 78 cents on Thursday, according to EMMA. Volume totaled $33.44 million in 31 trades compared to $20.94 million in 32 trades on Thursday.

The COFINA Series 2011C senior current interest revenue 5s of 2022 traded at a high price of 83 cents on the dollar compared to 74.6 cents on Thursday, according to EMMA. Volume totaled $11.09 million in mine trades compared to $660,000 in two trades on Wednesday.

Secondary market
Municipal bonds were stronger on Friday, according to a late read of the MBIS benchmark scale. Benchmark muni yields fell as much as one basis point across the curve.

High-grade munis were also stronger, with yields calculated on MBIS’ AAA scale falling as much as one basis point in the one- to 30-year maturities.

Municipals were unchanged according to Municipal Market Data’s AAA benchmark scale, which showed yields steady in the 10-year general obligation muni and flat in the 30-year muni maturity.

On Thursday, the 10-year muni-to-Treasury ratio was calculated at 83.9% while the 30-year muni-to-Treasury ratio stood at 96.9%, 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.

Week's actively traded issues
Some of the most actively traded bonds by type in the week ended June 8 were from Connecticut, California and Puerto Rico issuers, according to Markit.

In the GO bond sector, the Connecticut 4s of 2036 traded 32 times. In the revenue bond sector, the California Municipal Finance Authority 5s of 2047 traded 76 times. And in the taxable bond sector, the Puerto Rico Sales tax Financing Corp.6.05s of 2036 traded 37 times.

Week's actively quoted issues
Puerto Rico, Connecticut and New York and New Jersey names were among the most actively quoted bonds in the week ended June 8, according to Markit.

On the bid side, the Puerto Rico Sales tax Financing Corp.’s taxable 6.05s of 2036 were quoted by 57 unique dealers. On the ask side, the Connecticut GO 5s of 2026 were quoted by 164 dealers. And among two-sided quotes, the Port Authority of New York and New Jersey taxable 4.458s of 2062 were quoted by 26 dealers.

Lipper: Muni bond funds saw inflows
Investors in municipal bond funds again showed confidence and once again put cash into the funds in the latest reporting week, according to Lipper data released on Thursday.

The weekly reporters saw $189.487 million of inflows in the week ended June 6, after inflows of $77.249 million in the previous week.

Exchange traded funds reported inflows of $115.358 million, after inflows of $165.757 million in the previous week. Ex-ETFs, muni funds saw $74.129 million of inflows, after outflows of $88.509 million in the previous week.

The four-week moving average remained positive at $176.621 million, after being in the green at $171.080 million in the previous week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.

Long-term muni bond funds had inflows of $113.984 million in the latest week after inflows of $165.844 million in the previous week. Intermediate-term funds had inflows of $153.045 million after inflows of $129.236 million in the prior week.

National funds had inflows of $183.181 million after inflows of $328.046 million in the previous week. High-yield muni funds reported inflows of $147.159 million in the latest week, after inflows of $224.989 million the previous week.

Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Vanessa Kim at 212-803-8474 for more information.

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Aaron Weitzman

Aaron Weitzman

Aaron Weitzman is a markets reporter for The Bond Buyer, focusing on the sell side of the municipal bond market.
Chip Barnett

Chip Barnett

Chip Barnett is a journalist with more than 40 years of experience. Barnett is currently Senior Market Reporter for The Bond Buyer.