Bond yields at a glance
MBIS benchmark (~AA)
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Municipal bond volume is expected to slip after another week of investor inflows, as issuers offer more chunks of taxable bonds.
Ipreo estimates volume will expand to $5.25 billion, down from the revised total of $6.61 billion sold in the past week, according to updated figures from Thomson Reuters. The calendar for the week ahead is composed of $5.08 billion of negotiated deals and $164 million in competitive sales.
There are 16 deals on the docket that are $100 million or larger in par amount, with taxable bonds taking up half of the six largest expected transactions. There is a billion dollar plus deal as well, the first of the year.
“Right now there is a market opportunity for corporate issuance,” said Dan Heckman, senior fixed income strategist at U.S. Bank Wealth Management. “For some issuers, they have a chance to do some financing, although the cost is more at the end of the day, projects need to get done and rates are still low.”
Heckman, like many others, thought taxable issuance would pick up this year.
“I wasn’t expecting the trend to be so sudden and so soon," he said, "but we do need to get these projects finished and taxable financing looks attractive from a historical standpoint.”
Jefferies is scheduled to price the Commonwealth Financing Authority’s $1.39 tobacco master settlement payment revenue bonds on Wednesday. The deal is rated A1 by Moody’s Investors Service, A by S&P Global Ratings and A-plus by Fitch Ratings.
Bank of America Merrill Lynch is expected to price the State of Hawaii’s $775 million of general obligation taxable bonds on Tuesday after a one-day retail order period on Monday. The deal is rated Aa1 by Moody’s, AA-plus by S&P and AA by Fitch.
Wells Fargo is slated to price the Hampton Roads Transportation Accountability Commission, Va.’s $500 million of transportation fund senior lien revenue bonds on Tuesday. The deal is rated AA by S&P and AA-plus by Fitch.
Week's actively traded issues
Some of the most actively traded bonds by type in the week ended Jan. 26 were from California, Illinois and New York & New Jersey issuers, according to Markit.
In the GO bond sector, the Los Angeles Unified School District, 5s of 2024 traded 33 times. In the revenue bond sector, the Chicago Sales Tax Securitization Corp., 3.82s of 2048 traded 53 times. And in the taxable bond sector, the Port Authority of New York & New Jersey 2.114s of 2018 traded 16 times.
Week's actively quoted issues
Puerto Rico and California names were among the most actively quoted bonds in the week ended Jan. 26, according to Markit.
On the bid side, Puerto Rico Sales Tax Financing Corp. revenue 6s of 2042 were quoted by 36 unique dealers. On the ask side, the California GO 5s of 2026 were quoted by 180 dealers. And among two-sided quotes, the California taxable 7.55s of 2039 were quoted by 31 unique dealers.
California, New York and Texas were the three states with the most trades on Tuesday, with the Golden State taking 14.435% of the market, the Empire State taking 10.12% and the Lone Star State taking 7.868%.
Lipper: Muni bond funds saw inflows
Investors in municipal bond funds again put cash into the funds in the latest week, according to Lipper data released on Thursday.
The weekly reporters saw $781.160 million of inflows in the week of Jan. 24, after inflows of $1.18 billion in the previous week.
Exchange traded funds reported outflows of $17.950 million, after inflows of $118.046 million in the previous week. Ex-ETFs, muni funds saw $799.110 million of inflows, after inflows of $1.06 billion in the previous week.
The four-week moving average was positive at $744.164 million, after being in the green at $503.830 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 had inflows of $772.983 million in the latest week after inflows of $1.099 billion in the previous week. Intermediate-term funds had inflows of $329.453 million after inflows of $178.692 million in the prior week.
National funds had inflows of $776.001 million after inflows of $1.14 billion in the previous week.
High-yield muni funds reported inflows of $32.551 million in the latest week, after inflows of $206.925 million the previous week.
Data appearing in this article from Municipal Bond Information Services, including the MBIS municipal bond index, is available on The Bond Buyer Data Workstation. Click here for a brief tour of the Workstation, or contact Vanessa Kim at 212-803-8474 for more information.