Top-shelf municipal bonds finished weaker on Monday, as yields on some maturities rose as many as three basis points, according to traders. The five competitive sales the Empire State Development Corp. had planned for Tuesday were delayed until Thursday, because of a blizzard warning for the New York City area.
Secondary Market
The 10-year benchmark muni general obligation yield was two basis points higher to 2.49% from 2.47% on Friday, while the yield on the 30-year GO increased one basis point to 3.25% from 3.24%, according to a final read of Municipal Market Data's triple-A scale.
U.S. Treasuries were weaker at the market close. The yield on the two-year Treasury rose to 1.37% from 1.35% on Friday, while the 10-year Treasury yield climbed to 2.61% from 2.58%, and the yield on the 30-year Treasury bond increased to 3.19% from 3.16%.
On Monday, the 10-year muni to Treasury ratio was calculated at 95.4%, compared with 95.7% on Friday, while the 30-year muni to Treasury ratio stood at 101.8%, versus 102.3%, according to MMD.
Primary Market
Municipal bond traders are set to see $5.81 billion of new deals hit the market this week, led by the five competitive sales from the New York state issuer. Traders will also be watching the Federal Reserve, which meets in Washington on Tuesday and Wednesday, with an interest rate hike expected.
The largest deals this week are on the competitive side, as the Empire State Development Corp. is scheduled to sell a total of roughly $1.84 billion.
It was announced around the time the market closes that the largest deal of the week was been postponed. The bonds will be auctioned on Thursday, instead of the original scheduled day of Tuesday.
The New York State Urban Development Corp.'s state personal income tax revenue general purpose bonds will feature both taxable and tax-exempts. The two largest sales, $523.52 million and $507.32 million, will be taxables and the other three sales, $318.98 million, $247.93 million and $246.36 million, will be tax-exempts.
The ESDC's roots trace to the Division of Commerce, created by the state legislature in 1941, and the UDC, which the legislature created in 1968. Over the years, many departments and divisions were created to handle the challenges of the state. Then, in 1995, in an effort to reduce the size of government and improve efficiency, the operational efforts of the Department of Economic Development and the UDC were consolidated. They now do business as the Empire State Development Corp.
Market participants will have to wait and see if any other deals get postponed due to weather conditions. At press time, the deals below were still scheduled for Tuesday.
Also in the competitive arena, Boulder Valley School District No. RE-2, Colo., is set to sell roughly $284.88 million over two separate deals. The general obligation and GO refunding bonds are rated Aa1 by Moody's Investors Service and AA-plus by S&P Global Ratings and Fitch Ratings.
In the negotiated sector, RBC Capital Markets is expected to price the Ohio Water Development Authority's $400 million of state water pollution control loan fund revenue bonds. The deal is rated triple-A by Moody's and S&P.
Citigroup is scheduled to price the California Health Facilities Financing Authority's $287 million of revenue bonds for El Camino Hospital. The deal is expected to mature serially from 2020 through 2037 and include term bonds in 2042 and 2047. The deal is rated A1 by Moody's and A-plus by S&P.
PR Bond Prices Weaken
Puerto Rico bonds weakened as the Puerto Rico Oversight Board approved a 10-year fiscal plan that will allow the payment of less than 24% of debt due, less than under Puerto Rico Gov. Ricardo Rossell-'s first fiscal proposal.
Puerto Rico general obligation bonds with an 8% coupon maturing in 2035 and more than $1 million traded were almost a point cheaper than on Friday, Markit reported.
Prior Week's Actively Traded Issues
Revenue bonds comprised 58.46% of new issuance in the week ended March 10, down from 58.51% in the previous week,
Some of the most actively traded issues by type in the week ended March 10 were from California and New York.
In the GO bond sector, the California 4s of 2038 were traded 55 times. In the revenue bond sector, the New York City Transitional Finance Authority 3.5s of 2034 were traded 30 times. And in the taxable bond sector, the California 7.55s of 2039 were traded 18 times.
Previous Week's Top Underwriters
The top negotiated and competitive underwriters of last week included Citi, Morgan Stanley, Bank of America Merrill Lynch, JP Morgan and RBC Capital Markets, according to Thomson Reuters data.
In the week of March 5 to March 11, Citi underwrote $2.32 billion, Morgan Stanley $1.69 billion, BAML $1.62 billion, JPM $1.31 billion and RBC $776 million.
