Top-shelf municipal bonds were steady to weaker at mid-session, traders said, as yields on some maturities strengthened by as much as a basis point.
After the long holiday weekend, the primary kicked into gear with a competitive sale from the Florida Department of Transportation and a negotiated deal from the Indiana Finance Authority.
Secondary Market
The yield on the 10-year benchmark muni general obligation was steady from 1.75% on Friday, while the 30-year muni yield was as much as one basis point stronger from 2.70%, according to a read of Municipal Market Data's triple-A scale.
Treasuries moved lower on Tuesday. The yield on the two-year Treasury rose to 0.87% from 0.84% on Friday, while the 10-year Treasury yield gained to 2.04% from 2.02% and the 30-year Treasury bond yield increased to 2.81% from 2.80%.
The 10-year muni to Treasury ratio was calculated on Friday at 86.4% compared to 85.2% on Thursday, while the 30-year muni to Treasury ratio stood at 96.2% versus 94.7%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 34,285 trades on Friday on volume of $8.68 billion.
Primary Market
Muni new issue volume is forecast at $5.46 billion for the week, consisting of $3.13 billion of negotiated deals and $2.33 billion of competitive sales.
In the competitive arena on Tuesday, the Florida DOT sold $173.25 million of Series 2016A turnpike revenue refunding bonds.
Bank of America Merrill Lynch won the issue with a true interest cost of 2.87%. The deal was priced as 5s to yield from 0.63% in 2017 to 2.12% in 2026, and from 2.77% with a 4% coupon in 2030 to 3.31% with a 3.25% coupon in 2036.
The bonds were rated Aa3 by Moody's Investors Service and AA-minus by Fitch Ratings.
Previous to this sale, the last time the DOT competitively sold comparable bonds was on Oct. 5, 2015, when Bank of America Merrill Lynch won $195.88 million of Series 2015B turnpike revenue refunding bonds with a TIC of 3.15%.
In the negotiated sector on Tuesday, JPMorgan priced the Indiana Finance Authority's $163.40 million of Series 2016A hospital revenue refunding bonds for the Indiana University Health Obligated Group. The bonds were priced as 5s to yield from 0.78% in 2017 to 2.16% in 2025. The deal is rated Aa3 by Moody's, AA-minus by S&P and AA by Fitch.
The largest deals of the week are coming on Wednesday from Washington state, which will put up for bid two competitive sales totaling $673 million.
The Evergreen State will sell $529.36 million of Series R-2016B various purpose general obligation refunding bonds and $143.65 million of Series R-2016C motor vehicle tax GO refunding bonds. Both series are rated Aa1 by Moody's and AA-plus by Standard & Poor's and Fitch.
Also in the competitive arena, the University of Kentucky will offer sales totaling $158.116 million on Wednesday. The issues consist of $109.26 million of Series 2016A general receipts bonds and $48.85 million of Series 2016B taxable general receipts bonds. Both series are rated Aa2 by Moody's and AA by S&P.
Additionally on Wednesday, the Rosemount-Apple Valley Independent School District No. 196, Minn., will sell $121.30 million Series 2016A GO school building bonds under the Minnesota School District enhancement program. The issue is rated Aa1 by Moody's and AA-plus by S&P.
On Thursday, the Board of Regents for the University of Houston will offer two deals totaling $285 million. The BOR will sell $101.15 million of Series 2016A tax-exempt consolidated revenue and refunding bonds and $183 million of Series 2016B taxable consolidated revenue and refunding bonds. The bonds are rated Aa2 by Moody's and AA by S&P.
Loop Capital Markets is expected to price the District of Columbia Water and Sewer Authority's $372.25 million of public utility subordinate lien revenue refunding bonds on Wednesday. The issue is rated Aa3 by Moody's, AA by S&P and AA-minus by Fitch.
Stifel is slated to price Gwinnet County School District, Ga.'s $330 million of GO sales tax bonds on Thursday. The issue is rated triple-A by Moody's and S&P.
Citigroup is scheduled to price the New York Triborough Bridge & Tunnel Authority $300 million of MTA bridges and tunnels general revenue bonds on Thursday after a one-day retail order period on Wednesday. The transaction is rated Aa3 by Moody's and AA-minus by both S&P and Fitch.
Wells Fargo Securities is expected to price the Aldine Independent School District, Texas' $265.46 million of unlimited tax school building and refunding bonds on Wednesday. The issue is backed by the Permanent School Fund guarantee program and has underlying ratings of Aa1 from Moody's and AA from S&P.
Morgan Stanley is set to price the Massachusetts Development Finance Agency's $176.47 million of Series 2016 revenue bonds for the UMass Memorial Health Care Obligated Group.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $1.01 billion to $9.55 billion on Tuesday. The total is comprised of $4.32 billion competitive sales and $5.22 billion of negotiated deals.
Last Week's Most Active Sectors
Revenue bonds comprised 54.43% of new issuance in the week ended Jan. 15, down from 56.02% in the previous week, according to Markit. General obligation bonds comprised 38.24% of total issuance, up from 36.76%, while taxable bonds made up 7.33%, up from 7.22%.
Some of the most actively traded issues by type were in Illinois, South Carolina and Michigan.
In the GO bond sector, the Chicago 5s of 2038 traded 70 times. In the revenue bond sector, the South Carolina Public Service Authority 3.75s of 2048 traded 64 times. And in the taxable bond sector, the Anchor Bay School District 2.12s of 2020 traded 13 times,
Treasury to Review Market for 1st Time in Nearly 20 Years
For the first time in almost 20 years, the U.S. Treasury Department is undertaking a comprehensive review of the government securities market.
Treasury said on Tuesday it wants public comments on the evolving structure of the Treasury market. Treasury is asking participants and stakeholders for their views on changes in market structure, the implication for market functioning, and on risk management policies and practices.
"The Treasury market remains the deepest, most liquid market in the world, a source of safety and liquidity, and a haven in times of turbulence" Antonio Weiss, Counselor to the Treasury Secretary, said in a press release. "The
The RFI is the most comprehensive review of the Treasury market since the 1998 Joint Study of the Regulatory System for Government Securities.
