Municipals were steady Friday ahead of a large new-issue calendar with several mega deals set to price. U.S. Treasury yields rose and equities ended mixed.
The two-year muni-UST ratio Friday was at 68%, the five-year at 65%, the 10-year at 66% and the 30-year at 87%, according to Municipal Market Data's 3 p.m. EDT read. ICE Data Services had the two-year at 68%, the five-year at 65%, the 10-year at 67% and the 30-year at 87% at a 4 p.m. read.
Richer ratios are coming, analysts at BofA and Barclays predict.
Movements in the muni curve since the end of August — sharply flattened 1s10s AAA curve and a steeper to unchanged 10s30s curve — have mirrored movement over the same period last year, though the starting places are different, BofA strategists wrote.
Muni-UST ratios have been doing the same thing, they said.
"If the 10-year Treasury rate trades in a very tight range from here to yearend due to the uncertainty of the Fed(eral Reserve)'s posture, we would expect long-term muni ratios to move even lower toward year end," BofA strategists wrote.
Tax-exempts should keep getting richer as they'll continue to benefit from robust inflows, lower rates and "manageable issuance," said Barclays strategists led by Mikhail Foux.
Barclays strategists recommend barbell tax-exempt portfolios, as they see value in the longer-dated tax-exempt and even the front end currently has more "upside."
Rate volatility might return "when we finally see economic releases, with renewed focus on the labor market," they said.
Issuance year-to-date is at $505.245 billion, just shy of 2024's record of $507.585 billion. The week of Nov. 17's $11.109 billion of supply will break last year's record.
"Although issuance next week is expected to be heavy yet again, accounting for Thanksgiving, the [Federal Open Market Committee meeting] week, and Christmas holidays, we probably have only two to three active supply weeks left this year," Barclays strategists said.
The trend of heavy issuance will likely continue for the foreseeable future, Barclays said.
"With net issuance at about $200 billion per year, we see the size of the muni market surpassing $4.6 trillion in 2026, putting $5 trillion within reach in several years," he wrote.
BofA predicts $640 billion of issuance next year, with $470 billion of new money and $170 billion of refundings.
Now that the longest-ever government shutdown has ended, BofA is seeing similarities to prior historical periods in the market. Muni returns have stayed positive in previous shutdowns as well, BofA writes.
"While history repeated itself in terms of returns — the ICE BofA Muni Master Index returned 1.15% during the shutdown, with the strongest by rating in BBBs, at longer maturities and for revenue bonds — history was rebuffed in terms of slopes. Rather than steepen, the 1s10s flattened by 32bp and the 10s30 steepened 9bp," they said.
New-issue calendar
The new-issue calendar is at $11.109 billion, with $8.179 billion negotiated deals on tap and $2.93 billion of competitives.
Ascension leads the negotiated slate with a total of $3.85 billion across multiple issuers, followed by New York City Municipal Water Finance Authority and Cornell University, both with approximately a $1 billion deal apiece.
The competitive calendar is led by Illinois with $600 million of Build Illinois bonds (sales tax revenue bonds) in three series.
AAA scales
MMD's scale was unchanged: 2.54% in 2026 and 2.46% in 2027. The five-year was 2.41%, the 10-year was 2.75% and the 30-year was 4.14% at 3 p.m.
The ICE AAA yield curve was cut up to a basis point: 2.55% (unch) in 2026 and 2.46% (unch) in 2027. The five-year was at 2.40% (unch), the 10-year was at 2.76% (+1) and the 30-year was at 4.11% (+1) at 4 p.m.
The S&P Global Market Intelligence municipal curve was little changed: The one-year was at 2.55% (+1) in 2025 and 2.46% (+1) in 2026. The five-year was at 2.41% (+1), the 10-year was at 2.75% (unch) and the 30-year yield was at 4.12% (unch) at 3 p.m.
Bloomberg BVAL was unchanged: 2.52% in 2025 and 2.47% in 2026. The five-year at 2.37%, the 10-year at 2.70% and the 30-year at 4.04% at 4 p.m.
Treasuries were weaker.
The two-year UST was yielding 3.615% (+2), the three-year was at 3.618% (+3), the five-year at 3.735% (+3), the 10-year at 4.149% (+3), the 20-year at 4.721% (+4) and the 30-year at 4.747% (+3) near the close.
Primary to come
Ascension (Aa3/AA/AA/) is set to price Tuesday $2.1 billion of taxable refunding corporate CUSIPs. Jefferies.
Ascension Health Alliance (Aa3/AA/AA/) is set to price $1.745 billion of revenue bonds: $700.585 million of fixed-mode bonds, Series 2025A-1, through the Indiana Finance Authority; $273.5 million of long-term mode bonds, Series 2025B-1, through the Rutherford County Health and Educational Facilities Board, Tennessee; and $388.595 million of long-term mode bonds, Series 2025C-1, and $382.255 million of long-term mode bonds, Series 2025C-2, through the Tarrant County Cultural Education Facilities Finance Corp. Morgan Stanley.
The New York City Municipal Water Finance Authority (Aa1/AA+/AA+/) is set to price $1.032 billion of water and sewer system second general resolution refunding revenue bonds, Fiscal 2026 Series AA, consisting of $600 million of Series AA-1 and $431.57 million of Series AA-2. Barclays.
Cornell University (Aa1/AA//) is set to price Monday $1 billion of taxable corporate CUSIPs. Goldman Sachs.
Houston (/BB+//) is set to price Tuesday $521.75 million of AMT airport system special facilities revenue bonds, consisting of $273.35 million of Series 2025B bonds (United Airlines terminal improvement projects); $145.6 million of Series 2025 bonds (United Airlines catering operations facility project); and $102.8 million of Series 2025 bonds (United Airlines ground services equipment facility project. BofA Securities.
The Ohio Water Development Authority (Aaa/AAA//) is set to price Tuesday $500 million of water pollution control loan fund revenue bonds. Jefferies.
The Sales Tax Securitization Corp. is set to price Wednesday $454.42 million of sales tax securitization bonds, consisting of $172.37 million of Series 2025A refunding bonds (/A+/AAA/AAA/), $206.485 of Series 2025A second lien refunding bonds (/A+/AA-/AA+/) and $57.11 million of Series 2025B taxable refunding bonds (/A+/AAA/AAA/). Goldman Sachs
The Los Angeles Community College District (Aaa/AA+//) is set to price Thursday $300 million of 2016 Election GO refunding bonds, Series F. BofA Securities.
The Massachusetts Housing Finance Agency (Aa2/AA+//) is set to price Tuesday $262.935 million of non-AMT sustainability housing bonds, consisting of $88.75 million of Series C-1 and $174.185 million of Series C-3. HilltopSecurities.
The Medical University Hospital Authority (Aa2/AA+//) is set to price Thursday $260.395 million of FHA-insured hospital mortgage revenue bonds (Indian Land Project). BofA Securities.
The Travis County Healthcare District (Aa2///AA+/) is set to price Monday $250.605 million of limited tax certificates of obligation. J.P. Morgan.
Harris County, Texas, (Aa2//AA/) is set to price Tuesday $211.22 million of toll road first lien revenue refunding bonds, Series 2025A. Baird.
Hamilton County, Ohio, is set to price Thursday $207 million of sales tax bond anticipation notes. Subordinate Series 2025 (Paycor Stadium Improvement Project). Stifel, Nicolaus & Co.
The Phoenix Civic Improvement Corp. (/AAA/AA+/) is set to price Tuesday $183.155 million of transportation excise tax revenue bonds, Series 2025. BofA Securities.
The Massachusetts Development Finance Agency (//BBB-/) is set to price Thursday $181.57 million of Tufts Medicine issue revenue bonds, consisting of $30.05 million of Series F bonds and $151.52 million of Series G taxable bonds. BofA Securities.
The University of Pittsburgh Commonwealth System of Higher Education (Aa1/AA+//) is set to price $175.375 million of Pitt asset notes. Barclays.
The Grand Rapids Economic Development Corp. is set to price Thursday $174.83 million of limited obligation revenue bonds (Beacon Hill At Eastgate Project), consisting of $107.83 million of Series A, $12.25 million of Series B-1, $15.75 million of Series B-2 and $39 million of Series B-3. Ziegler.
The University of Oklahoma Board of Regents (/AA-/A+/) is set to price Tuesday $171.91 million of tax-exempt general revenue refunding bonds, Series 2025A. Stifel, Nicolaus & Co.
Montgomery County, Texas, (Aaa/AA+//) is set to price Wednesday $154.585 million of limited tax refunding bonds, Series 2025A. RBC Capital Markets.
The Genesee County Funding Corp. (/BBB+//) is set to price Wednesday $150 million of revenue bonds (Rochester Regional Health Energy Projects), consisting of $142.195 million of Series 2025A bonds and $7.805 million Series 2025B taxable bonds. BofA Securities.
The Helena High School District, Montana, (A1/AA//) is set to price Thursday $130 million of GO school building bonds. D.A. Davidson.
The Central Texas Regional Mobility Authority (A2/A+// and A3/A//) is set to price Tuesday $123.745 million of revenue refunding bonds, consisting of $76.065 million of Series 2025A senior lien bonds and $47.68 million of Series B subordinate lien bonds. Wells Fargo.
The Public Finance Authority is set to price Thursday $116.915 million of tax-exempt student housing revenue bonds (PRG - Oxford Properties LLC), Series 2025A. Raymond James.
Colorado (Aa2/AA-//) is set to price Tuesday $115.595 million of tax-exempt building excellent schools today certificates of participation, Series 2025T. Piper Sandler.
The Chicago Park District (/AA-/AA/AA/) is set to price Tuesday $112.345 million of GO limited tax park bonds, consisting of $55 million of Series 2025A bonds and $57.345 million of Series 2025B refunding bonds. Loop Capital Markets.
The Golden State Connect Authority is set to price Thursday $106 million of telecommunications revenue bonds (Broadband Project). KeyBanc Capital Markets.
Competitive
The Missouri Highways and Transportation Commission (Aa1/AA+/AA+/) is set to sell $481.78 million of state appropriations mega projects state road bonds, Series A 2025, at 11 a.m. Eastern Tuesday.
Illinois (/A/A+/) is set to sell $300 million of Build Illinois bonds (sales tax revenue bonds), Junior Obligation Series A of December 2025, at 10:45 a.m. Tuesday; $150 million of Build Illinois bonds (sales tax revenue bonds), Junior Obligation Series B of December 2025, at 11:15 a.m. Tuesday; and $150 million of Build Illinois bonds (sales tax revenue bonds), Junior Obligation Series C of December 2025, at 11:45 a.m. Tuesday.
Fulton County, Georgia, (Aa2/AA/AA/) is set to sell $195.675 million of water and sewerage revenue refunding bonds at 10 a.m. Wednesday.
The Columbia County School District, Georgia, (Aa1/AA//) is set to sell $180 million of GOs, at 11 a.m. Tuesday.
The Davis School District Board of Education, Utah, (Aaa///) is set to sell $100 million of GOs, Series 2025B, at 11:30 a.m. Thursday.
Jessica Lerner contributed to this report.
