Munis were stronger Monday, with yields falling a basis point for most maturities, according to traders, as market participants got ready for institutional deals to start rolling in on Tuesday.
Primary Market
Volume for the week is forecast by Ipreo to dip to $9.08 billion, from a total of $11.67 billion last week, according to revised data from Thomson Reuters. The upcoming slate is composed of $7.38 billion of negotiated bond deals and $1.70 billion of competitive bond sales.
While there were no larger deals pricing for institutions Monday, retail investors had their chance to get a piece of the second largest deal of the week.
Citi priced the Port Authority of New York and New Jersey's $588.020 million of bonds, which will feature both alternative minimum tax and non-AMT portions for retail investors on Monday, prior to institutional pricing on Tuesday. The $238.020 million of consolidated AMT were priced for retail to yield from 1.05% with a 5% coupon in 2018 to 1.60% with a 5% coupon in 2021. The bonds were also priced to yield from 2.89% with a 5% coupon in 2032 to 3.07% with a 5% coupon in 2036. A term bond in 2041 was priced to yield 3.17% with a 5% coupon. The 2017 maturity was offered as a sealed bid.
The $350 million of consolidated non-AMT bonds were priced for retail to yield from 2.15% with a 5% coupon in 2027 to 2.28% with a 5% coupon in 2028. The bonds were also priced to yield 2.45% with a 5% coupon in 2030 and from 2.65% with a 5% coupon in 2033 to 2.77% with a 5% coupon in 2036. A term bond in 2041 was priced to yield 2.87% with a 5% coupon, a term bond in 2046 was priced to yield 2.92% with a 5% coupon and a term bond in 2056 was priced to yield 3.07% with a 5.25% coupon. The deal is rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.
The institutional action for the larger deals on the calendar gets underway on Tuesday, when the Port Authority deal, the largest of the week, is also scheduled to price for institutions.
Bank of America Merrill Lynch is expected to run the books on Chicago's $1.055 billion of O'Hare International Airport – general senior lien revenue refunding bonds, including alternative minimum tax and non-AMT on Tuesday. The deal is rated A by S&P and Fitch.
Goldman is slated to price the Dormitory Authority of the State of New York's $408 million of taxable and tax-exempt bonds for The New School on Tuesday. The deal is rated A3 by Moody's and A-minus by S&P.
There are three large competitive deals on the docket for Tuesday, the largest being $239.17 million of unlimited tax GO and refunding bonds from Bellevue, Wash., School District No. 405. The deal is backed by the Washington State School District Credit Enhancement Program and is rated Aa1 by Moody's and AA-plus by S&P.
The state of Ohio is scheduled to sell $150 million of infrastructure improvement GO bonds. The deal is rated Aa1 by Moody's and AA-plus by S&P and Fitch.
The North Kansas City School District No. 74 in Missouri will sell $114 million of GO improvement bonds for the Missouri Direct Deposit Program. The deal is rated Aa1 by Moody's and AA-plus by S&P.
Secondary Market
Munis ended Monday stronger , as the yield on the 10-year benchmark muni general obligation was one basis point lower to 1.73% from 1.74% on Friday, while the yield on the 30-year was one basis point lower to 2.56% from 2.57%, according to a final read of Municipal Market Data's triple-A scale.
U.S. Treasuries were mostly stronger on at the close on Monday. The yield on the two-year was flat at 0.85% from Friday, the 10-year Treasury yield dipped to 1.83% from 1.84% and the yield on the 30-year Treasury bond decreased to 2.58% from 2.62%.
The 10-year muni to Treasury ratio was calculated at 85.9% on Monday compared to 94.1% on Friday, while the 30-year muni to Treasury ratio stood at 88.9% versus 98.1%, according to MMD.
Prior Week's Actively Traded Issues
Revenue bonds comprised 58.31% of new issuance in the week ended Oct. 28, up from 57.99% in the previous week, according to Markit. General obligation bonds comprised 36.60% of total issuance, down from 36.63%, while taxable bonds made up 5.41%, down from 5.52%.
Some of the most actively traded issues by type in the week ended Oct. 28 were from California, New Jersey and Pennsylvania.
In the GO bond sector, the Twin Rivers Unified School District, Calif., 3.375s of 2043 were traded 35 times. In the revenue bond sector, the New Jersey Transportation Trust Fund Authority 4.1s of 2031 were traded 106 times. And in the taxable bond sector, the Commonwealth Financing Authority of Pennsylvania 4.144s of 2038 were traded 44 times.
Previous Week's Top Underwriters
The top negotiated and competitive underwriters of last week included Bank of America Merrill Lynch, Citigroup, Piper Jaffray, JPMorgan and Barclays, according to Thomson Reuters data. In the week of Oct. 23-Oct. 29, Bank of America Merrill Lynch underwrote $4.54 billion, Citigroup $1.34 billion, Piper Jaffray $952 million, JPMorgan $915 million and Barclays $877 million.
