Top shelf municipal bonds were steady in late morning trade as New York City offered its general obligation bonds to retail investors and the big LaGuardia Airport deal was being pre-marketed to buyers.
Primary Market
Action got underway on Monday as Bank of America Merrill Lynch priced New York City's $800.13 million of Fiscal 2016 Series E and F GOs for retail investors. A second day for retail orders will be held on Tuesday ahead of the institutional pricing on Wednesday.
The $774.04 million of Series E bonds were priced for retail to yield from 0.86% with a 5% coupon in 2019 to 2.90% with a 3% coupon in 2036; the 2017 and 2018 maturities were offered as sealed bids. No retail orders were taken in the 2027-2032 maturities.
The $26.10 million of Series F bonds were priced for retail to yield from 0.86% with a 3% coupon in 2019 to 2.79% with a 3% coupon in 2034; the 2016-2018 maturities were offered as sealed bids.
New York City GOs are rated Aa2 by Moody's Investors Service and AA by S&P Global Ratings and Fitch Ratings.
Meanwhile, Citigroup was sending around a pre-marketing scale on the New York Transportation Development Corp.'s $2.31 billion of tax-exempts, subject to the alternative minimum tax, for the LaGuardia Special Facilities Terminal B Redevelopment Project. The deal is scheduled to be formally priced on Tuesday.
According to the pre-marketing scale, the bonds were yielding from 2.91% with a 5% coupon in 2030 to 3.60% with a 4% coupon in 2037; a split 2041 maturity was priced as 4s and 5s to yield 3.77% and 3.47%; a 2046 maturity was priced as 5s to yield 3.52%; and a split 2051 maturity was priced as 4s and 5 1/4s to yield 3.97% and 3.57%.
The deal is also expected to contain a taxable component totaling about $150 million of bonds. The offering is rated Baa3 by Moody's and triple-B by Fitch.
This week's supply estimated at $11.3 billion, consisting of $9.02 billion of negotiated deals and $2.28 billion of competitive sales.
"Strong demand has easily absorbed the manageable new issue flow of recent weeks and we expect solid demand to continue as the new issue calendar builds," Janney Municipal Strategist Alan Schankel wrote in a Monday market comment, adding, "The Bond Buyer's 30-day visible supply, at $17.2 billion, is as high as it has been since December 2014."
On Tuesday, Goldman Sachs is expected to price the Municipal Improvement Corporation of Los Angeles' $800.22 million of lease revenue refunding bonds for retail investors ahead of the institutional pricing on Wednesday. The deal is rated A-plus by S&P and Fitch and AA-minus by Kroll Bond Rating Agency.
Piper Jaffray is set to price the Metropolitan Government of Nashville and Davidson County, Tenn.'s $298.98 million of Series 2016 GO refunding bonds. The deal is rated Aa2 by Moody's and AA by S&P.
In the competitive arena on Tuesday, the state of New Mexico is selling $332.79 million of severance tax bonds in two separate sales consisting of $282.86 million of Series 2016A and refunding Series 2016B severance tax bonds and $49.93 million of Series 2016C taxable severance tax bonds.
Loudoun County, Va., will competitively sell $144.67 million of Series 2016A GO public improvement and refunding bonds on Tuesday. The deal is rated triple-A by Moody's, S&P and Fitch.
The top negotiated and competitive underwriters of last week included JPMorgan, BAML, Morgan Stanley, Citigroup and Loop Capital Markets, according to Thomson Reuters data. In the week of May 8-14, JPMorgan underwrote $2.36 billion, BAML did $1.58 billion, Morgan Stanley had $530 million, Citi had $483 million and Loop did $459 million.
Bond Buyer Visible Supply
The Bond Buyer's 30-day visible supply calendar increased $639.0 million to $17.20 billion on Monday. The total is comprised of $6.32 billion of competitive sales and $10.88 billion of negotiated deals.
Secondary Market
The yield on its 30-year general obligation scale was steady on Monday as it remained at its record low level of 2.42%, according to a read of Municipal Market Data's triple-A scale. The yield on the 10-year benchmark muni was also steady from 1.54% on Friday, according to MMD. Its all-time low of 1.47% was set in November 2012.
U.S. Treasuries were weaker on Monday. The yield on the two-year Treasury rose to 0.78% from 0.75% on Friday, while the 10-year Treasury yield gained to 1.74% from 1.71% and the yield on the 30-year Treasury bond increased to 2.59% from 2.55%.
The 10-year muni to Treasury ratio was calculated at 90.4% on Friday compared with 87.6% on Thursday, while the 30-year muni to Treasury ratio stood at 94.8% versus 93.4%, according to MMD.
MSRB Previous Session's Activity
The Municipal Securities Rulemaking Board reported 31,275 trades on Friday on volume of $11.86 billion.
Prior Week's Actively Traded Issues
Revenue bonds comprised 53.27% of new issuance in the week ended May 13, down from 55.33% in the previous week, according to data released by
General obligation bonds comprised 39.98% of total issuance, up from 38.75%, while taxable bonds made up 7.75%, up from 5.92%.
Some of the most actively traded issues by type were from California and New York issuers.
In the GO bond sector, the California 5s of 2026 traded 28 times. In the revenue bond sector, the New York State Thruway Authority 4s of 2056 traded 58 times. And in the taxable bond sector, the St. Lawrence Co. IDA, N.Y., 4.429s of 2056 traded 35 times, Markit said.
