Municipal market participants will return from a long weekend Tuesday to a $5.5 billion primary calendar, according to Ipreo, a figure that is higher than that of the typical holiday-shortened week.
Primary Market
Estimated volume is down from $7.05 billion in the past week, according to revised data from Thomson Reuters. The upcoming slate is composed of $3.89 billion of negotiated bond deals and $1.61 billion of competitive bond sales.
"I don't see any calendar between now and the end of the year posing any problem for the underwriters," said Gary Binkiewicz, senior vice president and head municipal bond analyst at R. Seelaus and Co. "The deals have been and will continue to get put away easily and regularly."
The issuance will be mostly limited to two days, as the most of the larger deals are scheduled to price on either Wednesday or Thursday, which Thursday carrying the heavier load of the two.
The largest negotiated sale is schedule to price on Thursday, as Morgan Stanley will run the books on the Texas Transportation Commission's $615.26 million of state highway fund first tier revenue bonds.
Jefferies is on the docket to price the TTC's $90 million negotiated deal of state highway fund first tier revenue refunding put bonds, also on Thursday.
Bank of America Merrill Lynch is expected to price the California's Health Facilities Financing Authority's $306 million of revenue bonds for Providence St. Joseph Health on Thursday. The deal is rated Aa3 by Moody's Investors Service and AA-minus by S&P Global Ratings and Fitch Ratings.
In the competitive arena, the Dormitory Authority of the State of New York is slated to sell five competitive issues totaling roughly $704.68 million. The deal is rated Aa1 by Moody's and triple-A by S&P.
Back to the negotiated side, Jefferies is expected to price the New York Counties Tobacco Trust's $292.16 million of VI tobacco settlement pass-through bonds on Thursday.
"Two things will make this do well: the New York name attached to it and the fact that will provide some yield to a yield starved market," said Binkiewicz. "It will get gobbled up and digested well."
He also mentioned the Louisiana competitive sale on Aug. 30 as an example of the search for yield in the market right now.
"Louisiana didn't take a penalty, which shows you exactly that yield is in high demand," he said.
Separately, Binkiewicz said that we are in the midst of a $400 billion or greater year, something that he had pegged since before the year started.
"In general, the refundings are steady and should stay that way while new money is increasing. I think municipalities are starting to get on good footing and have reached a comfort level where they feel better about taking on new debt to get projects done," he said.
Secondary Market
Top-shelf municipal bonds were weaker on Friday, according to traders, who were analyzing last month's jobs report.
Non-farm payrolls rose 151,000 in August as the unemployment rate remained unchanged at 4.9%. Economists surveyed by IFR Markets had predicted payrolls rising by 180,000 with the unemployment rate falling to 4.8%.
The yield on the 10-year benchmark muni general obligation on Friday rose as much as one basis point from 1.44% on Thursday, while the yield on the 30-year was up by as much as two basis points from 2.12%, according to a read of Municipal Market Data's triple-A scale.
The yield on the two-year Treasury rose on Friday to 0.79% from 0.78% on Thursday, the 10-year Treasury yield gained to 1.60% from 1.57% and the yield on the 30-year Treasury bond increased to 2.27% from 2.23%.
Week's Most Actively Traded Issues
Some of the most actively traded issues by type in the week ended Sept. 2 were from California, Texas and Illinois issuers, according to
In the GO bond sector, the California 5s of 2046 were traded 117 times. In the revenue bond sector, the Univ. of Texas 2.5s of 2036 were traded 39 times. And in the taxable bond sector, the Illinois 6.63s of 2035 were traded 21 times.
Week's Most Actively Quoted Issues
California and Illinois issues were among the most actively quoted names in the week ended Sept. 2, according to Markit.
On the bid side, the Chicago taxable 7.3s of 2039 were quoted by 11 unique dealers. On the ask side, the California HFFA revenue 3s of 2047 were quoted by 24 unique dealers. And among two-sided quotes, the Illinois taxable 5.1s of 2033 were quoted by 17 unique dealers.
Lipper: Muni Bond Funds See Inflows
For the 48th straight week, municipal bond funds reported inflows, according to Lipper data released on Thursday. The weekly reporters saw $400.291 million of inflows in the week ended Aug. 31, after inflows of $800.918 billion in the previous week, Lipper said.
With the latest week's cash infusion, inflows have been recorded the second-highest number of consecutive weeks, according to Citi Research, surpassing the 47 straight weeks of inflows completed on Oct. 7, 2015. The record for muni fund inflows is for 64 weeks in a row completed on Jan. 7, 2009.
The four-week moving average remained positive at $789.730 billion after being in the green at $878.639 million in the previous week. A moving average is an analytical tool used to smooth out price changes by filtering out fluctuations.
Long-term muni bond funds experienced inflows, gaining $159.510 million in the latest week after inflows of $437.707 million in the previous week. Intermediate-term funds had inflows of $55.211 million after inflows of $199.927 million in the prior week.
National funds had inflows of $342.335 million on top of inflows of $671.285 million in the previous week. High-yield muni funds reported inflows of $30.474 million in the latest reporting week, after inflows of $147.840 million the previous week.
Exchange traded funds saw inflows of $95.576 million, after inflows of $148.664 million in the previous week.
