Prices of top-rated municipal bonds finished steady on Friday, as traders looked ahead to the upcoming week's $7.9 billion new issue slate with
some familiar faces from New York and California coming to market.
Weekly volume is estimated to include $5 billion of negotiated deals and $2.9 billion of competitive sales, according to TheBond Buyer and Ipreo. That compares with $4.6 billion that came to market in the past holiday shortened week, according to Thomson Reuters.
“I think the calendar will be well received,” said Alan Schankel, municipal strategist at Janney Capital Markets. “Demand has been steady, with fund flows coming in solidly positive in last two weeks. Rising rate fears at the retail level are subsiding, with chances of Fed hike this year diminishing.”
The New York Transitional Finance Authority will be coming with a total of $1 billion, including one negotiated deal and two competitive offerings.
JPMorgan is scheduled to price the NYC TFA’s $750 million of future tax secured subordinate bonds on Wednesday, after a two-day retail order period. The deal is expected to consist of three series: $350 million of fiscal 2016 subseries B-1, $350 million of fiscal 2016 series C and $50 million of fiscal 2016 Series D. The preliminary structure on the deal has it maturing serially from 2016-2038. It is rated Aa1 by Moody’s Investors Service and triple-A by both Standard and Poor’s and Fitch Ratings.
The competitive offerings from the TFA will be for $198.315 of Series B, subseries B-2 taxable bonds and $51.685 million of Series B, subseries B-3 taxables. Those are rated triple-A by Fitch.
“With $25 billion outstanding, NYC TFA is already in most portfolios, but its high grade ratings will attract continued interest,” Schankel said.
The State of California will be selling roughly $960.96 million of various purpose general obligation and refunding bonds in three separate competitive sales on Tuesday. Bid group A will consist of $105.96 million of federally taxable bonds, bid group B will consist of $322.5 million of tax-exempt GO refunding bonds and bid group C will consist of $532.5 million and will also be tax-exempt GO refunding bonds. All three sales are rated Aa3 by Moody’s, AA-minus by S&P and A-plus by Fitch.
The last major deal of the week will hit the market on Thursday, when Citi prices the New Jersey Turnpike Authority’s $750 million of revenue bonds. The deal is scheduled to mature serially from 2031-2034, with a term bond in 2045. The deal is rated A3 by Moody’s, A-plus by S&P and A by Fitch.
“The NJ Turnpike deal should benefit from improving environment for toll roads, which are benefitting from lower gasoline prices and rising traffic. It’s tough to travel in the northeast corridor without paying a Parkway or Turnpike toll,” said Schankel.
Secondary Trading
The yield on the 10-year benchmark muni general obligation ended steady on Friday from 2.02% on Thursday, while the yield on the 30-year GO was flat from 3.07%, according to the final read of Municipal Market Data's triple-A scale.
On Friday, Oct. 9, the yield on the 10-year muni was at 2.05% while the yield on the 30-year muni stood at 3.10%.
Treasury prices were mixed on Friday, with the yield on the two-year Treasury rising to 0.60% from 0.59% on Thursday, while the 10-year yield was flat from 2.02% and the 30-year yield decreased to 2.86% from 2.87%.
The 10-year muni to Treasury ratio was calculated on Friday at 98.6% versus 99.9% on Thursday, while the 30-year muni to Treasury ratio stood at 106.6% compared to 106.9%, according to MMD.
The Week's Most Actively Quoted Issues
New York & New Jersey and Puerto Rico were some of the most actively quoted names in the week ended Oct. 16 according to data released by Markit.
On the bid side, the Port Authority of New York & New Jersey taxable 4.81s of 2065 were quoted by 13 unique dealers. On the ask side, the Port Authority of New York & New Jersey revenue 5s of 2035 were quoted by 148 dealers. And among two-sided quotes, Puerto Rico commonwealth GO 8s of 2035 were quoted by 11 dealers, Markit said.
The Week's Most Actively Traded Issues
Some of the most actively traded issues in the week ended Oct. 16 were in New York & New Jersey and Puerto Rico, according to Markit.
In the revenue bond sector, the Port Authority of New York & New Jersey 4s of 2045 were traded 81 times. In the GO bond sector, the Puerto Rico commonwealth GO 8s of 2035 were traded 29 times. And in the taxable bond sector, the Port Authority of New York & New Jersey 4.81s of 2065 were traded 25 times, Markit said.
