Top-shelf municipal bonds were weaker at mid-session, according to traders, as the market took stock of this week's yield volatility as it looks ahead to next week's chunky new issue slate, which includes the biggest deal so far this year.
Ipreo estimates volume for next week at $10.23 billion, up from a revised total of $3.96 billion this week, according to updated data from Thomson Reuters.
Next week's slate is composed of $7.69 billion of negotiated deals and $2.54 billion of competitive sales.
The state of California is scheduled to hit the market with the largest bond deal of 2017 when it sells $2.4 billion of various purpose general obligation bonds on Tuesday. Some market sources speculated that if the deal sees good demand it could be upsized – perhaps to as much as $3.5 billion.
Citigroup will price the tax-exempt issue, which is currently slated to be composed of $1.9 billion of GO refunding bonds and $500 million of new money GOs.
Also next week, JPMorgan Securities will price the New York City Transitional Finance Authority's $800 million of future tax secured subordinate refunding bonds for institutions. And Jefferies will price the New York Metropolitan Transportation Authority's $300 million of green bonds.
In the competitive arena, the state of Maryland will be selling almost $1.2 billion of tax-exempt and taxable general obligation bonds in three separate sales.
Secondary Market
The 10-year benchmark muni general obligation yield rose as much as two basis points from 2.39% on Thursday, while the yield on the 30-year GO increased as much as two basis points from 3.16%, according to a read of Municipal Market Data's triple-A scale.
U.S. Treasuries were weaker on Friday. The yield on the two-year Treasury rose to 1.33% from 1.32% on Thursday, while the 10-year Treasury yield gained to 2.51% from 2.49%, and the yield on the 30-year Treasury bond increased to 3.10% from 3.09%.
On Thursday, the 10-year muni to Treasury ratio was calculated at 96.0% compared to 96.1% on Wednesday, while the 30-year muni to Treasury ratio stood at 102.5%, versus 102.0%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 43,939 trades on Thursday on volume of $10.24 billion.
Week's Most Actively Traded Issues
Some of the most actively traded issues by type in the week ended March 3 were from Maryland, New York, and Alabama, according to
In the GO bond sector, the Baltimore County, Md., 3s of 2018 were traded 29 times. In the revenue bond sector, the New York Municipal Water Finance Authority 4s of 2039 were traded 52 times. And in the taxable bond sector, the Alabama Port Authority 4.722s of 2040 were traded 38 times.
Week's Most Actively Quoted Issues
Mississippi, Pennsylvania and Illinois names were among the most actively quoted bonds in the week ended March 3, according to Markit.
On the bid side, the Mississippi Business Finance Corp. revenue 5.15s of 2028 were quoted by 61 unique dealers. On the ask side, the Lehigh, Pa., General Purpose Authority revenue 4s of 2035 were quoted by 209 unique dealers. And among two-sided quotes, the Illinois taxable 5.1s of 2033 were quoted by 22 unique dealers.
Week's Primary Market
Siebert Cisneros Shank priced the New York City Municipal Water Finance Authority's $394.79 million of Fiscal 2017 Series EE water and sewer second general resolution revenue bonds.
The deal is rated Aa1 by Moody's Investors Service and AA-plus by S&P Global Ratings and Fitch Ratings. The bonds carry a stable outlook from all three rating agencies.
Morgan Stanley priced the California Infrastructure and Economic Development Bank's $450 million of Series 2017 clean water state revolving fund revenue green bonds. The deal is rated triple-A by Moody's, S&P and Fitch.
RBC Capital Markets priced the Oklahoma Development Finance Agency's $251.68 million of Series 2017A tax-exempt and Series 2017B taxable revenue bonds for the Provident Oklahoma Education Resource Inc.'s Cross Village student housing project. The deal is rated BBB-minus by S&P.
In the negotiated sector on Wednesday, Barclays Capital priced the New Jersey Educational Facilities Authority's $119.91 million of Series 2017A revenue bonds for the Stevens Institute of Technology. The deal is rated A-minus by S&P.
Bank of America Merrill Lynch priced the Raleigh-Durham Airport Authority, N.C.'s $115.53 million of Series 2017A airport revenue refunding bonds subject to the alternative minimum tax. The deal is rated Aa3 by Moody's and AA-minus by Fitch.
Morgan Stanley priced the New Jersey Educational Facilities Authority's $99.75 million of revenue and refunding bonds for Ramapo College on Tuesday. The bonds were priced to yield from 1.15% with a 3% coupon in 2018 to 3.75% with a 3.50% coupon in 2036; a 2042 term bond was priced to yield 3.90% with a 3.75% coupon. The 2018 maturity is rated A2 by Moody's and A by S&P and all other maturities are insured by Assured Guaranty and is rated AA by S&P.
In the competitive arena, Baltimore County, Md., sold $545 million of notes and bonds in three separate sales.
Bank of America Merrill Lynch won the $225 million of Series 2017 metropolitan district bond anticipation notes with a true interest cost of 0.85%. BAML also won the $121 million of Series 2017 consolidated public improvement BANs with a TIC of 0.90%. And BAML won the $199 million issue with a TIC of 3.21%.
The BANs are rated MIG1 by Moody's, SP1-plus by S&P and F1-plus by Fitch. The bonds are rated triple-A by Moody's, S&P and Fitch.
Clark County, Nev., competitively sold $321.64 million of Series 2017 limited tax general obligation bond bank refunding bonds additionally secured by pledged revenues. BAML won the bonds with a TIC of 3.42%. The deal is rated Aa1 by Moody's and AA-plus by S&P.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $5.45 billion to $14.58 billion on Friday. The total is comprised of $4.40 billion of competitive sales and $10.18 billion of negotiated deals.
Lipper: Muni Bond Funds Report Outflows
Investors in municipal bond funds made an about-face and withdrew funds, according to Lipper data released late Thursday. The weekly reporters saw $346.225 million of outflows in the week ended Feb. 22, after inflows of $149.336 million in the previous week.
The four-week moving average remained in the green at positive $146.846 million, after being positive at $236.914 million in the previous week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds also had outflows, losing $228.545 million in the latest week after gaining $156.457 million in the previous week. Intermediate-term funds had outflows of $41.652 million after inflows of $82.507 million in the prior week.
National funds had outflows of $239.790 million after inflows of $207.266 million in the previous week. High-yield muni funds reported inflows of $48.366 million in the latest reporting week, after inflows of $227.761 million the previous week.
Exchange traded funds saw outflows of $105.083 million, after inflows of $36.447 million in the previous week.
