Top-shelf municipal bonds were weaker at mid-session, traders said, as the market prepares for a hefty $11.4 billion new issue calendar this week, headlined by two $1 billion-plus deals from New York issuers.
Secondary Market
The yield on the 10-year benchmark muni general obligation rose as much as two basis points from 1.49% on Friday, while the yield on the 30-year rose was up by as much as two basis points from 2.20%, according to a read of Municipal Market Data's triple-A scale.
Treasuries were little changed on Monday. The yield on the two-year Treasury was unchanged from 0.79% on Thursday, the 10-year Treasury yield gained to 1.68% from 1.67% and the yield on the 30-year Treasury bond increased to 2.40% from 2.39%.
On Friday, the 10-year muni to Treasury ratio was calculated at 89.2% compared to 90.0% on Thursday, while the 30-year muni to Treasury ratio stood at 92.0% versus 92.8%, according to MMD.
MSRB: Previous Session's Activity
The Municipal Securities Rulemaking Board reported 31,022 trades on Friday on volume of $13.99 billion.
Prior Week's Actively Traded Issues
Revenue bonds comprised 51.47% of new issuance in the week ended Sept. 9, up from 50.49% in the previous week, according to
Some of the most actively traded securities by type were from California, Ohio and Illinois issuers. In the GO bond sector, the California 3s of 2046 were traded 65 times. In the revenue bond sector, the Hamilton County, Ohio 5s of 2046 were traded 33 times. And in the taxable bond sector, the Illinois 6.63s of 2035 were traded 21 times.
Previous Week's Top Underwriters
The top negotiated and competitive underwriters of last week included Citigroup, Bank of America Merrill Lynch, JPMorgan Securities, RBC Capita Markets and Wells Fargo Securities, according to Thomson Reuters data. In the week of Sept. 4-Sept. 10, Citi underwrote $902.8 million, BAML $712.6 million, JPMorgan $493.5 million, RBC $431.4 million and Wells Fargo $272 million.
Primary Market
This week's slate is composed of $9.37 billion of negotiated bond deals and $2.05 billion of competitive bond sales with New York issuers dominating the calendar.
The New York City Transitional Finance Authority is scheduled to hit the market with a total of $1.05 billion in negotiated and competitive offerings.
On Monday, Ramirez & Co. opened the first day of a two-day retail order period for the TFA's $800 million of tax-exempt Fiscal 2017 Series B Subseries B-1 future secured subordinate bonds. The deal will be priced for institutions on Wednesday.
The issue was priced for retail to yield from 0.84% with 4% and 5% coupons in a spilt 2019 maturity to 3% at par in 2042. No retail orders were taken in the 2030-2034 or 2036-2039 maturities. A 2018 maturity was offered as a sealed bid.
The deal is expected to be rated Aa1 by Moody's Investors Service and rated triple-A by S&P Global Ratings and Fitch Ratings.
The TFA will offer two competitive sales of taxables on Wednesday, consisting of $62.5 million of Fiscal 2017 Series B Subseries B-3 future secured subordinate bonds and $187.51 million of Fiscal 2017 Series B Subseries B-2 future secured subordinate bonds.
Goldman Sachs is expected to price the New York Metropolitan Transportation Authority's $1.06 billion of Hudson Rail Yards Trust obligation bonds on Wednesday.
The deal is rated A2 by Moody's and A-minus by Kroll Bond Rating Agency.
Proceeds of the sale will be used to finance trust and commuter projects and to pay other costs associated with the monetization of the Hudson Rail Yard ground leases. In July, the MTA board authorized the bond offering to monetize a portion of the 99-year lease payments from Hudson Rail Yards commercial and residential development.
The MTA is one of the largest municipal issuers in the U.S., with nearly $37 billion of debt.
Citigroup is set to price the New York Convention Center Development Corp.'s $416 million of hotel unit fee secured revenue bonds consisting of Series 2016A senior liens and Series 2016B subordinated liens on Tuesday. The Series A bonds are rated Aa3 by Moody's while the Series B bonds are rated A2 by Moody's.
Siebert Cisneros Shank is slated to price Connecticut's $964.32 million of special tax obligation bonds and special tax obligation refunding bonds for transportation infrastructure purposes on Tuesday, following a one-day retail order period. The deal is rated Aa3 by Moody's, AA by S&P and AA-minus by Fitch.
Goldman is expected to price the Michigan Finance Authority's $820.42 million of Series 2016 hospital revenue refunding bonds for the Henry Ford Health System The deal is rated A3 by Moody's and A by S&P.
Goldman is also set to price the California Department of Water Resources' $567.86 million of taxable power supply revenue bonds on Tuesday. The deal is rated Aa1 by Moody's, AA by S&P and AA-plus by Fitch.
In the competitive arena on Tuesday, Paulding County, Ga., is selling $150.43 million of Series 2016 water and sewerage revenue improvement and refunding bonds. The deal is rated Aa3 by Moody's and AA by S&P.
The Louisville/Jefferson County Metro Government, Ky., is selling $154.4 million in two separate sales consisting of $91.25 million of Series 2016 general obligation bonds for the City Center project and $63.15 million of Series 1016A GOs. The deals are rated Aa1 by Moody's, AA-plus by S&P and triple-A by Fitch.
On Wednesday, the largest competitive sales of the week will be coming from the Virginia Public Building Authority, which will offer three separate issues totaling $550 million.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $1.80 billion to $18.15 billion on Monday. The total is comprised of $4.08 billion of competitive sales and $14.06 billion of negotiated deals.
Municipal CUSIP Requests Rose 7% in Aug.
Demand for new municipal CUSIP identifiers rose 7% in August after plunging 30% in July, CUSIP Global Services said in a report released on Monday.
A total of 1,306 new municipal bond identifier requests were made last month, up from 1,218 in July, marking a return to the strong pace of activity among municipal issuers so far this year.
On a year-over-year basis, CUSIP requests for new muni bond identifiers were up 3.4% through August.
The report tracks requests by issuers for bond identifiers as an early indicator of new volume and suggests a resurgence of municipal issuance in the next several weeks.
"Outside of a few seasonal and market-driven blips in request volume, we've continued to see incredibly strong demand for CUSIP identifiers for new securities so far this year," Gerard Faulkner, director of operations for CUSIP Global Services, said in a release. "Based on the August data, we expect to see a sustained pace of new security issuance through the next several months."
Regionally, Texas continued to lead the way this year with a total of 1,414 new CUSIP ID requests in 2016, followed by New York State with 1,093, and California with 836.
"Though we continue to see ongoing economic and political instability on a global basis, overall CUSIP request volume is suggesting a fairly robust pace of new issuance as we exit the summer doldrums," Richard Peterson, senior director, S&P Global Market Intelligence, said in the release. "This metric will continue to be a fascinating indicator of overall issuer sentiment as we head into the U.S. election and wrestle with ongoing debate over the future of monetary policy around the world."
