Supply-starved municipal bond buyers were rewarded for their patience as a bevy of new deals hitting the market on Tuesday, led by a large note deal from a New Jersey issuer and big bond sales from New York City and Houston.

A sizable primary market calendar this week is offsetting the otherwise lackluster seasonal pattern — with strong demand stemming from the July reinvestment period driving new issues, according to Fred Yosca, managing director at BNY Mellon Capital Markets.

“What buyside interest there is is driven by the primary market demand,” he said, adding, issues from New York and New Jersey are getting the most attention.

“The customer interest is focused there,” he said. “Away from that, it’s really sleepy. Even the brokers aren’t calling,” he added.

“In terms of trading activity we are very much in that summer doldrums mode,” he said.

Yosca said the New York Transitional Finance Authority deal was highly sought — with significant interest on the short end, particularly 2028 through 2030 maturities. “They’re not taking orders short of 2031,” he said, noting those maturities were likely placed during the two-day retail order period.

The long-end outside of 20 years has been really slow in the secondary market, he said. “It very much is a market with short interest — the front end is on fire and the back end is dead,” he said.

“Retail all seems to be front-end driven,” he explained. “There’s a knee-jerk reaction with the Fed tightening, and that should translate into not having higher long-term rates, but that nuance gets lost by the retail investor,” he said.

Primary market
Morgan Stanley priced the New Jersey Transportation Trust Fund Authority’s $1.21 billion of Series 2018A federal highway reimbursement revenue refunding notes.

The deal consists of tax-exempt GARVEE notes not subject to the alternative minimum tax.

The notes are rated Baa1 by Moody’s Investors Service, A-plus by S&P Global Ratings and A-minus by Fitch Ratings.

Ramirez & Co. priced the New York City Transitional Finance Authority’s $919.77 million of tax-exempt Fiscal 2019 Series S-1 and Fiscal 2019 Series S-2 Subseries S-2A building aid revenue bonds after a two-day retail order period.

The NYC TFA also competitively sold $111.455 million of taxable Fiscal 2019 Subseries S-2B BARBs. Citigroup won the bonds with a true interest cost of 3.1233%.

The BARBs are rated Aa2 by Moody’s and AA by S&P and Fitch.

On Monday, the TFA announced details on its sale of future tax secured subordinate bonds. Proceeds from the bond sale will be used to fund capital projects. The pricing of $850 million of tax-exempt fixed rate bonds is expected to take place on July 25 after a two-day retail order period. On July 25, the TFA will also competitively sell $300 million of taxable fixed rate bonds.

Siebert Cisneros Shank & Co. priced $572.15 million of Houston Series 2018C airport system subordinate lien revenue refunding bonds, subject to the AMT and the Series 2018D non-AMT bonds on Tuesday. The deal is rated A1 by Moody’s and A by Fitch.

Since 2008, the city has sold about $15 billion of bonds, with the most issuance occurring in 2014 when it sold $2.52 billion of debt. It sold the least amount in 2015 when it issued $485.1 million of bonds.

Jefferies priced the Ohio Water Development Authority’s $166.52 million of fresh water Series 2018 water development revenue bonds. The deal is rated AAA by Moody’s and S&P.

In the competitive arena on Tuesday, Los Angeles sold $127.98 million of Series 2018A solid waste resources revenue bonds. Citigroup won the bonds with a TIC of 2.4843%. The deal is rated Aa2 by Moody’s and AA by Kroll Bond Rating Agency. The financial advisors are Fieldman, Rolapp & Associates and Urban Futures; the bond counsel is Orrick Herrington.

The Suffolk County Water Authority, N.Y., sold $100 million of Series 2018A water system revenue bonds. Bank of America Merrill Lynch won the bonds with a TIC of 3.5643%. The deal is rated AAA by S&P and Fitch. The financial advisor is Goldman Sachs; the bond counsel is Harris Beach.

Tuesday’s sales

New Jersey:
Click here for the TTFA pricing

New York:
Click here for the NYC TFA pricing

Click here for the NYC TFA taxable sale

Click here for the NYC TFA retail pricing, Day 2

Click here for the NYC TFA retail pricing, Day 1

Texas:
Click here for the Houston pricing

Ohio:
Click here for the WDA pricing

Bond Buyer 30-day visible supply at $12.79B
The Bond Buyer's 30-day visible supply calendar increased $1.02 billion to $12.79 billion on Tuesday. The total is comprised of $4.03 billion of competitive sales and $8.76 billion of negotiated deals.

Secondary market
Municipal bonds were mixed on Tuesday, according to a midday read of the MBIS benchmark scale. Benchmark muni yields fell less than one basis point in the four- to eight-year, 12- to 15-year and 28- to 30-year maturities, rose less than a basis point in the one- to three-year, nine- and 10-year and 17- to 26-year maturities, and remained unchanged in the 11-year, 16-year and 27-year maturities.

High-grade munis were also mixed, with yields calculated on MBIS’ AAA scale falling less than one basis point in the one- to seven-year maturities, rising less than a basis point in the nine- to 13-year and 15- to 30-year maturities and remaining unchanged in the eight-year and 14-year maturities.

Municipals were mixed on Municipal Market Data’s AAA benchmark scale, which showed the 10-year muni general obligation yield remaining unchanged while the yield on the 30-year muni maturity rose by one basis point.

Treasury bonds were weaker Tuesday as stocks traded higher.

On Monday, the 10-year muni-to-Treasury ratio was calculated at 84.3% while the 30-year muni-to-Treasury ratio stood at 98.1%, according to MMD. The muni-to-Treasury ratio compares the yield of tax-exempt municipal bonds with the yield of taxable U.S. Treasury with comparable maturities. If the muni/Treasury ratio is above 100%, munis are yielding more than Treasury; if it is below 100%, munis are yielding less.

Previous session's activity
The Municipal Securities Rulemaking Board reported 35,375 trades on Monday on volume of $9.61 billion.

California, New York and Texas were the states with the most trades, with the Golden State taking 14.972% of the market, the Empire State taking 11.221% and the Lone Star State taking 9.936%.

Treasury sells $26B year-bills, $45B 4-week bills
The Treasury Department Tuesday auctioned $26 billion of 364-day bills at a 2.335% high yield, a price of 97.639056. The coupon equivalent was 2.410%. The bid-to-cover ratio was 3.03.

Tenders at the high rate were allotted 85.10%. The median yield was 2.310%. The low yield was 2.280%.

Treasury also auctioned $45 billion of four-week bills at a 1.880% high yield, a price of 99.853778. The coupon equivalent was 1.909%. The bid-to-cover ratio was 2.91.

Tenders at the high rate were allotted 78.87%. The median rate was 1.860%. The low rate was 1.830%.

Gary Siegel contributed to this report.

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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