Top-rated municipal bonds were stronger in early activity, according to traders, as the market looks ahead to what should be an exciting week with about $7.2 billion of new supply set to be sold.
Secondary Market
The yield on the 10-year benchmark muni general obligation was as much as two basis points weaker from 1.61% on Friday, while the 30-year muni yield was as much as one basis point weaker from 2.54%, according to a read of the Municipal Market Data's triple-A scale.
U.S. Treasuries were weaker on Monday morning. The yield on the two-year Treasury increased to 0.74% from 0.73% on Friday, while the 10-year Treasury yield rose to 1.76% from 1.75% and the yield on the 30-year Treasury bond gained to 2.58% from 2.56%.
The 10-year muni to Treasury ratio was calculated at 92.0% on Friday compared with 91.0% on Thursday, while the 30-year muni to Treasury ratio stood at 99.2% versus 98.7%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 33,329 trades on Friday on volume of $10.28 billion.
Previous Week's Actively Traded Issues
Revenue bonds comprised 53.23% of new issuance in the week ended April 15, down from 54.48% in the previous week, according to Markit. General obligation bonds comprised 40.04% of total issuance, up from 39.70%, while taxable bonds made up 6.73%, down from 5.82%.
Some of the most actively traded issues by type in the week ended April 15 were in Puerto Rico, California and Illinois. In the GO bond sector, Puerto Rico commonwealth 8s of 2035 traded 52 times. In the revenue bond sector, University of California 5s of 2046 traded 82 times. And in the taxable bond sector, Illinois 5.1s of 2033 traded 22 times, Markit said.
Primary Market
A few big names are set to come to market in the highest supply week since the week of March 11.
About $7.19 billion is expected to hit screens this week, with the calendar broken down into $4.40 billion of negotiated deals and $2.79 billion of competitive sales.
The action will get started Tuesday when the state of California will sell three separate competitive sales totaling roughly $1.49 billion.
The largest of the trio of deals will be $645.3 million of tax-exempt various purpose general obligation refunding bonds. The issue is expected to be split between $176 million of VP GO bonds and $469.3 million of VP GO refunding bonds.
The second largest sale will be $606.7 million of tax-exempt various purpose GO refunding bonds. The issue is expected to be split, with $56.2 million of VP GO bonds and $550.5 million of VP GO refunding bonds.
The third sale will be $236.795 million of taxable various purpose GO bonds. The deals are rated Aa3 by Moody’s Investors Service, AA-minus by Standard and Poor’s and A-plus by Fitch Ratings.
Bank of America Merrill Lynch is expected to price the largest negotiated issue, the Texas Transportation Commission’s $615 million of state highway improvement GO bonds on Tuesday. The deal is rated triple-A by all three rating agencies and is the state’s largest deal so far this year.
Proceeds from this issue will go toward capital projects, particularly those designed to relieve congestion in the major urban areas.
Stifel is expected to price the Carmel Bond Bank, Ind.’s $224.12 million of local public improvement multipurpose bonds, in a deal that will mark the first issue of bonds by the city’s recently established bond bank.
The debt package combines in one sale what otherwise would have been a series of issues of general obligation bonds, redevelopment authority lease rental bonds, and special stormwater tax district bond issues.
Proceeds will help finance new projects such as the design and construction of roundabout and other road infrastructure projects, stormwater and drainage improvements, and local redevelopment improvements. A portion of the lease rental bonds will refund outstanding debt.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $210 million to $11.16 billion on Monday. The total is comprised of $4.25 billion of competitive sales and $6.91 billion of negotiated deals.
Richard Williamson and Nora Colomer contributed to this report
