The influx of issuance continued on Tuesday, with the largest deal of the week leading the way in the downpour of pricings.
"There has been a lot more taxable and alternative minimum tax deals in the market lately," said one Southern trader, who noted the largest deal of the week was part AMT. "Our market seems very adaptable and has easily absorbed these several recent heavy issuance weeks."
He added that the taxable supply has had lots of buyers and since much of the taxable issuance has been advance refundings, it has reduced some of the potential tax-exempt paper outstanding, which has been supportive of the overall market.
"There also seems to be incremental value with AMT, as fewer buyers are affected by it these days," he said.
Primary market
The action kicked off on Tuesday and in a big way, with the largest deal of the week hitting the market, as Bank of America Securities priced Port Authority of New York and New Jersey’s (Aa3/AA-/AA-) $1.1 billion of consolidated bonds.
“The deal looked pretty attractive to me,” said one New York trader. “It seemed to be well compensated given structure, maturities, and alternative minimum tax — [there is] no better value in the market at the moment.”
The 2049 maturity in the non-AMT portion was priced as 4s to yield 2.66%. The same maturity in the AMT portion was priced as 5s to yield 2.64%. The Municipal Market Data's benchmark curve has the 30-year maturity at 2.15%, putting the deal 51 and 49 basis points above the MMD scale.
The 2032 non-AMT maturity was priced as 5s to yield 1.86%, while the AMT 2032 maturity was priced as 5s to yield 2.13%. For comparison, the MMD 2032 maturity is at 1.71%, that is 15 and 42 basis points above MMD.
The Port authority's most recent deal before today, saw the 2032 maturity trade 3 times on Monday with an average yield of 2.088%, a high yield of 2.105% and a low of 2.080%.
Slightly aggressive is how the pricing of the Port Authority deal ended up on Tuesday, according to a New York trader.
“Many maturities were way oversubscribed,” according to the trader, who said the heavy demand is a result of continued record cash flows amid funds.
“The Port is a quality name so it fits many investors’ portfolio needs,” the trader added.
Since 2009, the Authority has issued just over $24 billion of securities. The highest issuance year occurred in 2012 when it sold $3.695 billion and the lowest year came back in 2016 when it issued $1.1 billion.
Citi priced Round Rock Independent School District’s (Aaa/NR/AAA) $401.98 million of unlimited tax school building refunding and non-Permanent School Fund ( /NR/ ) refunding bonds.
Citi also priced
BofAS also priced the Dormitory Authority of the State of New York’s (Aa1/AA/ ) $163.425 million of Rockefeller University revenue green bonds.
BofAS kept its busy day going by running the books on Wisconsin Health and Educational Facilities Authority’s $141.15 million (A1/ AA-) of revenue bonds for Thedacare.
The largest competitive deal came from the Florida Department of Transportation (Aa2/AA/AA), as it sold $177.93 million. The bonds were won by Citi with a true interest cost of 2.7874%.
The State of Nevada (Aa1/AA+/AA+) sold $155.29 million of general obligation limited tax capital improvement and refunding bonds. The bonds were won by Morgan Stanley with a TIC of 2.0704%.
JP Morgan priced Norman Regional Hospital Authority's (Baa1/A-/NR) $111.46 million of hospital revenue bonds for the Norman Regional Hospital Authority Obligated Group.
The Board of Education of the Granite School District, Utah, (Aaa/ /AAA) sold $100 million of general obligation school building bonds, that were won by BofAS with a TIC of 1.3492%.
Secondary market
Munis were weaker on the MBIS benchmark scale, with yields rising by less than one basis point in both the 10- and 30-year maturities. High-grades were mixed, with yields on MBIS AAA scale decreasing less than a basis point in the 10-year and flat in the 30-year maturity.
On Refinitiv Municipal Market Data’s AAA benchmark scale, the yield on the 10-year GO was unchanged from 1.55% and the 30-year GO was lower by one basis point to 2.14%.
The 10-year muni-to-Treasury ratio was calculated at 90.9% while the 30-year muni-to-Treasury ratio stood at 99.3%, according to MMD.
Treasuries were mostly lower and stocks were mixed, with The Nasdaq and S&P 500 in the green. The Treasury three-month was up and yielding 1.567%, the two-year was down and yielding 1.586%, the five-year was down and yielding 1.619%, the 10-year was down and yielding 1.788% and the 30-year was down and yielding 2.256%.
Previous session's activity
The MSRB reported 32,572 trades Friday on volume of $7.83 billion. The 30-day average trade summary showed on a par amount basis of $10.40 million that customers bought $5.85 million, customers sold $2.70 million and interdealer trades totaled $1.86 million.
California, New York and Texas were most traded, with the Golden State taking 14.372% of the market, the Empire State taking 13.713% and the Lone Star State taking 9.738%.
The most actively traded securities were the District of Columbia income tax revenue, 5s of 2029 traded 6 times on volume of $29.5 million.
Treasury to sell $50B 4-week bills
The Treasury Department said it will sell $50 billion of four-week discount bills Thursday. There are currently $40.000 billion of four-week bills outstanding.
Treasury also said it will sell $40 billion of eight-week bills Thursday.
Treasury also announced it will sell $15 billion 16-day cash management bills on Wednesday.
Gary E. Siegel and Christine Albano 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.
