Top rated municipal bonds were stronger in early activity, according to traders, with yields on some maturities falling by as much as three basis points.
The yield on the 10-year benchmark muni general obligation was as much as two basis points weaker from 1.62% on Monday while the 30-year muni yield was as much as three basis points weaker from 2.58%, according to an early read of Municipal Market Data's triple-A scale.
U.S. Treasuries were stronger on Tuesday as stock prices fell on worries about global economic growth. The yield on the two-year Treasury dropped to 0.74% from 0.79% on Friday, while the 10-year Treasury yield declined to 1.79% from 1.86% and the yield on the 30-year Treasury bond decreased to 2.66% from 2.72%.
The 10-year muni to Treasury ratio was calculated at 86.9% on Monday compared with 88.5% on Friday, while the 30-year muni to Treasury ratio stood at 95.0% versus 96.6%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 35,008 trades on Monday on volume of $9.98 billion.
Primary Market
Municipal bond traders are set to see the start of a big new issue calendar hit the market on Tuesday. The supply slate consists of $6.45 billion of negotiated deals and $1.72 billion of competitive sales.
RBC Capital Markets is set to price the Dormitory Authority of the State of New York's $219.29 million of Series 2016 A, B, C and D school district revenue bond financing program revenue bonds for institutions after holdimng a one-day retail order period.
The $193.440 million of Series A bonds were priced for retail to yield from 0.75% with a 2% coupon in 2017 to 3.14% with a 3.125% coupon in 2036. A term bond in 2039 was priced to yield 3.26% with a 3.25% coupon. The 2016 maturity was offered as a sealed bid. The 2034-2036 and 2039 maturities are insured by Build America Mutual, totaling roughly $735.5 million.
The $14.770 million of Series B bonds were priced to yield from 0.54% with a 2% coupon in 2016 to 1.67% with a 5% coupon in 2024. The $7.465 million of Series C bonds were priced to yield from 0.54% with a 2% coupon in 2016 to 1.67% with a 5% coupon in 2024. The $3.610 million of Series D bonds were priced to yield from 0.58% with a 2% coupon in 2016 to 1.72% with a 5% coupon in 2024.
The Series A bonds are rated A-plus by Standard & Poor's and AA-minus by Fitch Ratings except for the 2034-2036 and 2039 maturities which are rated AA by S&P. The Series B bonds are rated Aa3 by Moody's Investors Service and AA-minus by Fitch; the Series C bonds are rated AA-minus by S&P and Fitch; and the Series D bonds are rated A-plus by S&P and AA-minus by Fitch.
In the competitive arena on Tuesday, Seattle, Wash, is selling three deals totaling $151 million. The sales consist of $107.54 million of Series 2016A limited tax general obligation improvement and refunding bonds; $37.75 million of Series 2016 unlimited tax GO improvement bonds; and $6.04 million of Series 2016B taxable limited tax GO improvement bonds. The Series 2016A and Series 2016B bonds are rated Aa1 by Moody's and triple-A by S&P and Fitch and the Series 2016 bonds are rated triple-A by Moody's, S&P and Fitch.
Also on Tuesday, the Dallas Community College District, Texas, is competitively selling $123.50 million of Series 2016 limited tax GO refunding bonds. The deal is rated triple-A by Moody's, S&P and Fitch.
The Missouri Board of Public Buildings is competitively selling $100 million of Series 2016A special obligation bonds on Tuesday. The deal is rated Aa1 by Moody's and AA-plus by S&P and Fitch.
In the negotiated sector, Citigroup is expected to price the Louisiana Public Facilities Authority's $150 million of revenue bonds for the Ochsner Clinic on Tuesday. The deal is rated Baa1 by Moody's and A-minus by Fitch.
Bank of America Merrill Lynch is set to price Whiting, Ind.'s $120 million of Series 2016A environmental facilities revenue bonds for BP Products North America, Inc., on Tuesday. The deal is rated A2 by Moody's and A-minus by S&P.
Citi is set to price on Tuesday for retail investors the Ohio Housing Finance Agency's $112 million of residential housing mortgage revenue bonds under the mortgage-backed securities program. The institutional pricing is scheduled for Wednesday. The deal is rated triple-A by Moody's.
The biggest deal of the week is coming on Wednesday from the North Texas Tollway Authority. JPMorgan Securities is expected to price the NTTA's $947 million of Series 2016A system first tier revenue refunding bonds.
The deal is rated A1 by Moody's and A by S&P.
Since 2006, the NTTA has sold more nearly $14 billion of debt, with over $1 billion of bonds sold in 2008, 2009, 2011 and 2015. The smallest issuance year was 2013, when the authority did not sell any bonds.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.81 billion to $14.62 billion on Tuesday. The total is comprised of $6.13 billion of competitive sales and $8.49 billion of negotiated deals.
