Top-quality municipal bonds were weaker at mid-session, according to traders, with yields on some maturities strengthening by as much as two basis points.
Traders are keeping an eye on supply ahead of a week that sees $8.33 billion of new deals coming to market, highlighted by offerings from two stressed issuers in the Land of Lincoln.
In the primary on Monday, Citigroup released a pre-marketing scale on Chicago's $500 million deal, market sources said.
The Series 2015C general obligation refunding bonds were priced on a pre-marketing basis as 5s to yield from 3.60% in 2020 to 4.68% in 2031 with term bonds in 2035 and 2038 yielding 4.875% and 4.95%, respectively, according to sources.
The issue is rated triple-B-plus by Standard & Poor's and Fitch Ratings and A-minus by Kroll Bond Rating Agency. The deal is slated to be priced for institutional investors on Tuesday.
On Thursday, Illinois will competitively sell $480 million of Series of 2016 GOs. The bonds are rated Baa1 by Moody's Investors Service, A-minus by S&P and triple-B-plus by Fitch.
On the higher-rated side, the Illinois Regional Transportation Authority on Wednesday will competitively sell $100 million of Series 2016A GOs. This issue is rated Aa3 by Moody's and AA by S&P and Fitch.
Elsewhere, the Trinity Health Credit Group will be coming to market with a $568 million composite offering with bonds coming from four different issuers.
The deal consists of the Michigan Finance Authority's Series hospital revenue and refunding bonds; the Connecticut Health and Educational Facilities Authority's revenue bonds; the Idaho Health Facilities Authority's Series revenue bonds; and Montgomery County, Md.'s Series revenue bonds.
The issue is expected to be priced by Bank of America Merrill Lynch on Tuesday. The bonds are rated Aa2 by Moody's, AA-minus by S&P and AA by Fitch.
The California Health Facilities Financing Authority will be offering $500 million of Series 2016A revenue bonds for Sutter Health. The deal, which is rated Aa3 by Moody's and AA-minus by S&P and Fitch, is expected to be priced by Morgan Stanley on Wednesday.
Secondary Market
The yield on the 10-year benchmark muni general obligation on Monday was as much as one basis point stronger from 1.75% on Friday, while the 30-year muni yield was stronger by as much as two basis points from 2.70%, according to a read of Municipal Market Data's triple-A scale.
Treasuries turned narrowly mixed. The yield on the two-year Treasury slipped to 0.93% from 0.94% on Friday, while the 10-year Treasury yield increased to 2.15% from 2.13% and the 30-year Treasury bond yield gained to 2.94% from 2.92%.
At midday, stock prices lost earlier gains to trade lower. The Dow Jones Industrial Average fell about 20 points, the Nasdaq Composite Index decreased by around 30 and the S&P 500 Index was off by nearly six.
The 10-year muni to Treasury ratio was calculated on Friday at 82.2% compared with 81.3% on Thursday, while the 30-year muni to Treasury ratio stood at 92.5% versus 91.9%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 33,691 trades on Friday on volume of $10.15 billion.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar rose $60.3 million to $13.20 billion on Monday. The total is comprised of $5.15 billion competitive sales and $8.05 billion of negotiated deals.
Last Week's Most Active Sectors
Revenue bonds comprised 56.02% of new issuance in the week ended Jan. 8, up from 54.71% in the previous week, according to Markit. General obligation bonds comprised 36.76% of total issuance, down from 37.60%, while taxable bonds made up 7.22%, down from 7.68%.
Some of the most actively traded issues by type were in California, New Jersey and Texas.
In the GO bond sector, the California 5s of 2026 traded 34 times. In the revenue bond sector, the New Jersey State Transportation Trust Fund Authority 5s of 2045 traded 46 times. And in the taxable bond sector, the University of Texas 3.852s of 2046 traded 21 times.
