Municipal bonds were stronger at midday as the first of the week’s new issue supply hit the screens.

Secondary market
The yield on the 10-year benchmark muni general obligation fell one to three basis points from 1.86% on Monday, while the 30-year GO yield declined one to three basis points from 2.69%, according to a read of Municipal Market Data's triple-A scale.

U.S. Treasuries were also stronger on Tuesday. The yield on the two-year Treasury dropped to 1.28% from 1.31% on Monday as the 10-year Treasury yield declined to 2.14% from 2.18% while the yield on the 30-year Treasury bond decreased to 2.80% from 2.84%.

On Monday, the 10-year muni to Treasury ratio was calculated at 85.2%, compared with 86.2% on Friday, while the 30-year muni to Treasury ratio stood at 94.7% versus 95.7%, according to MMD.

MSRB: Previous session's activity
The Municipal Securities Rulemaking Board reported 40,424 trades on Monday on volume of $7.06 billion.

Primary Market
On Tuesday, RBC Capital Markets priced the Metropolitan Washington Airports Authority’s $523.79 million of Series 2017A airport system revenue refunding bonds, subject to the alternative minimum tax.

The bonds were priced to yield from 0.98% with a 5% coupon in 2018 to 3.11% with a 5% coupon in 2037. A 2042 term bond was priced to yield 3.19% with a 5% coupon and a 2047 term was priced to yield 3.25% with a 5% coupon. The 2017 maturity was offered as a sealed bid.

The deal is rated Aa3 by Moody’s Investors service and AA-minus by S&P Global Ratings and Fitch Ratings.

Morgan Stanley priced the Regional Transportation District, Colo.’s $120.09 million of Series 2017B sale tax revenue bonds for the Fasttracks Project.

The issue was priced to yield from 2.66% with a 5% coupon in 2033 to 3.13% with a 4% coupon in 2036.

The deal is rated Aa2 by Moody’s, AA-plus by S&P and AA by Fitch.

In the short-term negotiated sector, Citigroup priced Los Angeles County, Calif.’s $800 million of 2017-2018 tax and revenue anticipation notes.

The notes were priced as 5s to yield 0.90% in 2018 with no optional call and interest paid at maturity.

The TRANs are rated MIG1 by Moody’s, SP1-plus by S&P and F1-plus by Fitch.

Since 2007, the county has issued roughly $10.40 billion of note deals, with the highest amount occurring in 2009 through 2011 when it sold $1.3 billion in each of those years. The county saw low note issuance totals in 2007 and 2008, when it issued just $500 million.

In the competitive arena on Tuesday, the Virginia College Building Authority sold $251.04 million of Series 2017A & B education facilities revenue and revenue refunding bonds for the 21st Century College and equipment program.

Citigroup won the deal with a true interest cost of 1.58%. The $76.04 million of Series 2017A revenue bonds were priced as 5s to yield from 0.80% in 2018 to 1.47% in 2024. The $175 million of Series 2017B revenue refunding bonds were priced as 5s to yield from 0.80% in 2018 to 2.04% in 2028.

The deal is rated Aa1 by Moody’s and AA-plus by S&P and Fitch.

Seattle, Wash., sold $239.92 million of Series 2017 drainage and wastewater system improvement and refunding revenue bonds.

PNC Capital Markets won the deal with a TIC of 3.15%. Pricing information was not immediately available.

The deal is rated Aa1 by Moody’s and AA-plus by S&P.

Orange County, Fla., is selling $202.73 million of Series 2017 tourist development tax refunding revenue bonds.

Wells Fargo Securities won the deal with a TIC of 2.05%. The issue was priced as 5s to yield from 0.88% in 2018 to 1.35% in 2022 and from 1.83% in 2025 to 2.50% in 2030.

The deal is rated Aa3 by Moody’s, AA-minus by S&P and AA by Fitch.

And the New Hampshire Bond Bank sold $118.71 million of Series 2017B revenue bonds. BAML won the deal with a TIC of 2.98%.

The issue was priced to yield from 0.80% with a 5% coupon in 2018 to 3.15% with a 3% coupon in 2037. A term bond in 2042 was priced to yield 3.18% with a 4% coupon and a term bond in 2046 was priced to yield 3.23% with a 4% coupon.

The deal is rated Aa2 by Moody’s and AA-plus by S&P.

Also on Tuesday, Barclays Capital is expected to price the East Bay Municipal Utility District, Calif.’s $453.84 million of Series 2017A water system revenue green bonds and Series 2017B water system revenue refunding bonds. The deal is rated Aa1 by Moody’s, AAA by S&P and AA-plus by Fitch.

Siebert Cisneros Shank is set to price the city of Chicago’s $399.71 million of Series 2017A project and Series 2017B refunding second lien wastewater transmission revenue bonds. The deal is rated A by S&P and AA-minus by Fitch and Kroll Bond Rating Agency.

Bank of America Merrill Lynch is expected to price the Board of Regents of the Texas A&M University System’s $398.66 million of Series 2017B revenue financing system bonds. The deal is rated triple-A by Moody’s, S&P and Fitch.

Bond Buyer 30-day visible supply
The Bond Buyer's 30-day visible supply calendar increased $115.6 million to $12.24 billion on Tuesday. The total is comprised of $5.11 billion of competitive sales and $7.13 billion of negotiated deals.

Ramirez: Gross supply to decline
Gross municipal bond supply in May was $39 billion, up 35% month over month and up 3% compared to May 2016, with year to date gross issuance running at $151 billion, down 5% year over year, according to Ramirez & Co.’s weekly market comment.

“Given the trend of low gross issuance year-to-date, we reaffirm our long-term new issue gross supply forecast at $368 billion, for a decline of about $60 billion, or 14% year over year,” the report said. “Our supply forecast incorporates $204 billion of new money bonds and $164 billion of refundings.”

The report said that net supply through May was up $1.4 billion, but added that in the next 30 days the market will shrink by around $38 billion as bonds mature or are called early.

Ramirez estimates that coupon payments in June will be about $54 billion.

“States driving the supply deficit include New York (-$8.94 billion), California (-$7.11 billion), New Jersey (-$4.36 billion), Arizona (-$2.41 billion), and Pennsylvania (-$1.87 billion),” the report said.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.
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.
Aaron Weitzman

Aaron Weitzman

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