Municipal bonds finished the day stronger on Tuesday, as traders prepared for the first big wave of issuance to hit on Wednesday.
The yield on the 10-year benchmark muni general obligation fell two basis points to 1.93% from 1.95% on Friday, while the 30-year GO yield dropped three basis points to 2.77% from 2.80%, according to a final read of Municipal Market Data's triple-A scale.
U.S. Treasuries were also stronger at the close on Tuesday. The yield on the two-year Treasury dipped to 1.28% from 1.29% on Friday as the 10-year Treasury yield dropped to 2.21% from 2.24% while the yield on the 30-year Treasury bond decreased to 2.88% from 2.91%.
On Tuesday, the 10-year muni to Treasury ratio was calculated at 87.2%, compared with 86.8% on Friday, while the 30-year muni to Treasury ratio stood at 96.0%, versus 96.1%, according to MMD.
Volume for this week is estimated at $4.83 billion, consisting of $3.28 billion of negotiated deals and $1.55 billion of competitive sales.
Citi priced the Houston Independent School District’s $149.955 million of variable rate limited tax schoolhouse bonds, Series 2014A-2 on Monday. The deal was priced as a bullet maturity in 2039 to yield 1.17% with a 3% coupon and a tender date of July 1, 2019 with a 7.00% step rate. It is backed by the Permanent School Fund Guarantee Program and rated triple-A by Moody’s Investors Service and S&P Global Ratings.
On Wednesday, two Connecticut issuers will be coming to market with over $600 million of bond deals.
Morgan Stanley is set to price Connecticut’s $370 million of state revolving fund general revenue bonds for retail investors ahead of the institutional pricing on Thursday. The deal consists of Series 2017A SRF green bonds and Series 2017B refunding bonds. It is rated triple-A by Moody’s, S&P and Fitch Ratings.
Barclays Capital is set to price the Connecticut Health and Educational Facilities Authority’s $250 million of Series 2017B revenue bonds for Yale University. The deal is rated triple-A by Moody’s and S&P.
Bank of America Merrill Lynch is expected to price the Louisiana Local Government Environmental Facilities and Community Development Authority’s $250.89 million of Series 2017A tax-exempt and Series 2017B taxable hospital refunding revenue bonds for the Women’s Hospital Foundation. The deal is rated A2 by Moody’s and A by S&P.
Piper Jaffray is set to price the Austin Independent School District, Texas’ $216.73 million of Series 2017 unlimited tax refunding bonds. The deal is rated triple-A by Moody’s.
Citigroup is expected to price Clark County, Nev.’s $148 million of Series 2017C airport system junior subordinate lien revenue notes subject to the alternative minimum tax. The deal is rated A1 by Moody’s and A-plus by S&P.
In the competitive arena, Arlington County, Va., is selling $185.1 million of Series 2017 general obligation public improvement bonds on Wednesday. The deal is rated triple-A by Moody’s, S&P and Fitch.
Prior week's actively traded issues
Revenue bonds comprised 55.54% of new issuance in the week ended May 26, down from 56.91% in the previous week, according to Markit. General obligation bonds comprised 38.52% of total issuance, up from 37.33%, while taxable bonds made up 5.94%, up from 5.76%.
Some of the most actively traded bonds by type were from New York, Maryland and Florida York issuers.
In the GO bond sector, the Albany County, N.Y., 4s of 2018 were traded 53 times. In the revenue bond sector, the Baltimore, Md., Convention Center 5s of 2046 were traded 50 times. And in the taxable bond sector, the Florida Catastrophe 2.995s of 2020 were traded 19 times.
Previous week's top underwriters
The top negotiated and competitive underwriters of last week included Goldman Sachs, Stifel, Wells Fargo Securities, Raymond James and Bank of America Merrill Lynch, according to Thomson Reuters data.
In the week of May 21 to May 27, Goldman underwrote $2.14 billion, Stifel $714.9 million, Wells Fargo $528.1 million, Raymond James $438.1 million and BAML $414.4 million.