N.J. tobaccos dominate supply slate

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The municipal market wound up the week firm ahead of the Good Friday holiday as traders eyed a healthy new issue calendar.

The holiday shortened week was a factor in keeping municipal activity quiet, according to Shaun Burgess, portfolio manager and fixed income analyst at Cumberland Advisors. The market is performing well and benefiting from good demand, he said,

Ipreo estimates volume for the coming week at $7.85 billion, up from a revised total of $3.40 billion in the past week, according to updated data from Thomson Reuters. The calendar is composed of $6.62 billion of negotiated deals and $1.23 billion of competitive sales.
Headlining the upcoming week’s slate is the big tobacco deal coming out of New Jersey. Jefferies is set to price the Tobacco Settlement Financing Corp.’s $3.22 billion of Series 2018A senior and Series 2018B subordinate tobacco settlement bonds on Wednesday after a one-day retail order period. The deal will refund all of the corporation’s outstanding tobacco bonds, which were issued in 2007.

The influx of volume may give the boost that's needed to jump-start the primary market.

The New Jersey tobacco deal in particular will offer the size and yield that will generate interest among large institutional buyers for attractively-priced New Jersey paper, according to Howard Mackey, managing director at NW Financial Group in Hoboken, N.J.

“That’s going to have a major impact,” he said. "Obviously because of the size of the issue it will provide a lot of liquidity to a lot of buyers in the tax-exempt marketplace.”

He said it will be of particular interest to investors who can purchase triple-B credits -- and who want attractive pricing and liquidity -- both of which should stir demand in a scarce market that has been starved for supply, Mackey said.

Besides insurance companies and mutual funds, it may even entice some cross-over buyers, he said. “Due to the size of the issue, there will have to be an accommodation on the price. But, if it is priced at the right price, it is going to be well received.”

Citigroup is expected to price the San Diego County, Calif., Regional Transportation Commission’s $538 million of Series 2018A subordinate sales tax revenue short-term notes, limited tax bonds, due 2021, on Wednesday.

And Siebert Cisneros Shank is set to price the New York City Municipal Water Finance Authority’s $425 million of Fiscal 2018 Series EE water and sewer system second resolution revenue bonds on Wednesday after a one-day retail order period.

In the competitive arena, the biggest deal of the week is coming from Albany County, N.Y., which is selling $152 million of Series 2018 various purpose general obligation bonds on Wednesday.

Burgess said that the week's new issues seemed to be getting strong demand -- with some of the deals Cumberland is involved with being multiple times oversubscribed.

“As for Connecticut, they are clearly paying up for market access with yields of 4% in 2036,” hes said. “Although this is attractive in relative terms, it is not a credit we purchase because of budgetary and pensions concerns.”

Week’s primary market
Loop Capital Markets received the official award on Connecticut’s $526.44 million of GO and GO refunding bonds institutions.

The deal is rated A1 by Moody’s Investors Service, A-plus by S&P Global Ratings and Fitch Ratings and AA-minus by Kroll Bond Rating Agency.

Connecticut’s bond deal:
Click here for the final Connecticut pricing

Click here for the Connecticut institutional pricing

Click here for Connecticut retail pricing

Week's actively traded issues
Some of the most actively traded bonds by type in the week ended March 29 were from Puerto Rico, California and New Jersey issuers, according to Markit.

In the GO bond sector, the Puerto Rico Commonwealth 8s of 2035 traded 120 times. In the revenue bond sector, the California Health Facilities Financing Authority 4s of 2042 traded 46 times. And in the taxable bond sector, New Jersey’s Rutgers University 4.146s of 2048 traded 30 times.

Week's actively quoted issues
Puerto Rico and California names were among the most actively quoted bonds in the week ended March 29, according to Markit.

On the bid side, the Puerto Rico GO 8s of 2035 were quoted by 61 unique dealers. On the ask side, the California taxable 7.55s of 2039 were quoted by 111 dealers. And among two-sided quotes, the Puerto Rico GO 8s of 2033 were quoted by 31 unique dealers.

ICI: Long-term muni funds see $769M inflow
Long-term municipal bond funds saw an inflow of $769 million in the week ended March 21, the Investment Company Institute reported on Wednesday.

This followed inflows of $703 million into the tax-exempt mutual funds in the week ended March 14 and inflows of $214 million, $110 million and $481 million in the three prior weeks.

Taxable bond funds saw estimated inflows of $4.53 billion in the latest reporting week, after seeing inflows of $7.74 billion in the previous week.

ICI said the total estimated outflows to long-term mutual funds and exchange-traded funds were $7.40 billion for the week ended March 21 after inflows of $33.08 billion in the prior week.
Tax-exempt money market funds saw outflows
Tax-exempt money market funds experienced outflows of $1.27 billion, lowering total net assets to $133.88 billion in the week ended March 27, according to The Money Fund Report, a service of iMoneyNet.com. This followed an outflow of $240.7 million on to $135.15 billion in the previous week.

The average, seven-day simple yield for the 198 weekly reporting tax-exempt funds increased to 0.85% from 0.74% the previous week.

The total net assets of the 829 weekly reporting taxable money funds increased $9.03 billion to $2.663 trillion in the week ended March 26, after an outflow of $17.65 billion to $2.654 trillion the week before.

The average, seven-day simple yield for the taxable money funds increased to 1.23% from 1.14% from the prior week.

Overall, the combined total net assets of the 1,027 weekly reporting money funds increased $7.76 billion to $2.797 trillion in the week ended March 26, after outflows of $17.89 billion to $2.790 trillion in the prior week.

Previous session's activity
The Municipal Securities Rulemaking Board reported 43,613 trades on Wednesday on volume of $14.07 billion.

California, New York and Texas were the states with the most trades, with the Golden State taking 17.396% of the market, the Empire State taking 13.531% and the Lone Star State taking 9.573%.

Treasury to sell $90B bills
The Treasury Department on Friday said it will sell $90 billion of 91- and 182-day bills on Monday.

The $48 billion of re-opened 13-week bills are dated April 5 with an original issue date of Jan. 4, and are due on July 5. There are $42 billion of bonds outstanding.

The $42 billion of 26-week bills are dated April 5, and are due on Oct. 4. There are no bonds outstanding.

Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Vanessa Kim at 212-803-8474 for more information.

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Primary bond market Secondary bond market Municipal bond funds State of California State of Texas State of Connecticut State of New York New York City Municipal Water Finance Authority New Jersey Tobacco Settlement Finance Corp. Commonwealth of Puerto Rico California Health Facilities Financing Authority Rutgers University